Could someone help explain this mortgage statement to me?

lil_lisa

I currently have a Together Mortgage with NR and also buildings and contents insurance through NR themselves (taken out when setting up the mortgage).

Currently the 'Together split' is approx £65k of mortgage and £17k of unsecured loan. The payments for which are £441.01 and £103.69 respectively (£544.70 total).

When I have printed out a mortgage statement online there is a statement which says:
"Your current monthly payment for insurance is £47.48. All displayed monthly repayments do not include insurance"
At first I was a little confused about this as we were only paying the £544 each month and not the £47.48. Looking at my quarterly statement I can now see that they list the £544 as a payment to this account but the insurance premium is being charged alongside the interest each month, so in reality this is now reducing the amount which actually gets paid off the mortgage to £497.22pm.

I have just called them and they state that the insurance is actually built into the mortgage and when asked about the impact of my mortgage payments if I were to swap to another insurance provider they weren't able to tell me how it would impact the mortgage itself (in my head I would have thought it would be straight forward as it appears the insurance has not been added as a lump sum at the beginning of the term but it being charged on a month by month basis).

Could anyone tell me how 'built in' arrangements like this actually work when it comes to cancelling policies? What complicates matters slightly is the fact that we will be penalised if we were to "repay our current mortgage or take another product at any time during the tie-in period" until April 2011.

Also, would it be fair to say that I had been missold this insurance as when originally contacted by Northern Rock to set this up I stated that I wished to shop around for my B&C insurance first before commiting to anything but was told that legally that insurance had to be set up at that time but I could cancel at a later date if I found a cheaper quote?

Let_Us_See

I assume this is Mortgage Payment Protection Insurance (MPPI) designed to pay your mortgage if you are made redundant or are too ill to work? The lender cannot simply add MPPI to your mortgage without your permission and I would advise you to check your paperwork and if necessary request proof of acceptance from NR. There is no investment aspect of MPPI and it can be stopped at any time, but please arrange new cover before cancelling. Lenders' MPPI cover is normally slightly higher than available on open market.

Mis-sold? ASk NR to prove you requested cover!

Gorgeous_George

If you find alternative insurance your mortgage payment will be £47.58 lower (due to insurance being removed). Everything else remains the same. You'll pay another insurance provider for the insurance.

It is not the suppliers' responsibility to make sure that you understand the product so I don't think you have a claim for mis-selling. That said, many people have successfully claimed regardless.

GG

lil_lisa

Let_Us_See wrote: »

I assume this is Mortgage Payment Protection Insurance (MPPI) designed to pay your mortgage if you are made redundant or are too ill to work? The lender cannot simply add MPPI to your mortgage without your permission and I would advise you to check your paperwork and if necessary request proof of acceptance from NR. There is no investment aspect of MPPI and it can be stopped at any time, but please arrange new cover before cancelling. Lenders' MPPI cover is normally slightly higher than available on open market.

Mis-sold? ASk NR to prove you requested cover!

It is actually for Buildings and Contents Insurance (sorry, stated in the first line of post but just said insurance afterwards so understandable confusion).

Would I still be able to cancel this B&C insurance as I would an MPPI?

Gorgeous_George

Of course. However, make sure you get suitable insurance first and NR may make a small charge to check the buildings are suitable insured.

GG