Payment Protection Insurance

Tootsie_Roll

You're not looking at the whole thing, just part of the redemption mechanics - really only a small part.

mrcow

Tootsie_Roll wrote:

You're not looking at the whole thing, just part of the redemption mechanics - really only a small part.

lol so when redeeming a mortgage, what other "mechanics" should I be looking at.

So sorry that this has gone off topic from the original PPI question....

.....but it was interesting what you said about lenders who should be able to claw back penalties for early redemption by overinflating their fees. If this is how you are going to justify the inflated fee how is it then fair to sell a mortgage with "no early redemption penalties"?

Besides the fact that you're ignoring that ALL customers have to pay these charges whether redeeming early or not. For many, when they signed up to the mortgage agreement, these fees were a true refleciton of costs. It's only in the past four or five years that they have escalated out of all proportion.

ArchieB_2

Tootsie_Roll wrote:

Again you're not making an accurate comparison - In any event in this instance the lender is losing all the interest they can charge over the whole loan period so actually we get off very lightly. And don't simply assume that they can lend the same money to someone else.

I'm not comparing anything - you said in your post that the charge has a right to be punitive. I'm saying it doesn't, that is all.

Tootsie_Roll

ArchieB wrote:

I'm not comparing anything - you said in your post that the charge has a right to be punitive. I'm saying it doesn't, that is all.

Because you are linking it to reclaiming bank charges on a current account which is just not relevant to this topic at all !!

nemo183

CYBERCIDERSAVER wrote:

I know on Credit cards you can cancel the PPI but I have a loan from Nat West (I know. It was one of their hard sells... I mean "account review" meetings). Can I cancel the PPI on it? I don't see why not and as I am on the last year of payments i don't owe a huge amount (Nothing my sharesave schemes can't cover) should I fall ill whatever???

Well, I can sure identify with the great pleasure of an "account review" meeting.

I'd be amazed if you could cancel. Given that it seems common practice, when taking out PPI, to calculate the total premiums that will be due over the duration of the loan, and then add them to the loan, so that not only do you pay interest on the loan, but interest on the PPI, even if you were to repay the loan in full now, early, you'd see not a penny of the PPI as it's been included in the loan.

By the way, even if your loan statement has a seperate line for the PPI, it's only there for show.

Just as an aside, as there are several people in this thread who work for banks and really understand the system, how do they justify this concept of rolling up the PPI in advance, and then charging interest?

Anyway, why not ask?

nemo183

Tootsie_Roll wrote:

A very simplistic view. You enter the cost of calculating the figure at zero !! What about the costs involved for manning that department, realeasing deeds etc etc etc. In addition to these you were ending a contract early seems only reasonable that you pay some penalty.

I agree that I have not included a cost for the calculation. When I made my posting, I did consider it but decided that when the computer system was written, the very small amount of code required to make the calculation, plus the likely lifetime of the system made the processing time cost effectively zero, and that the actual cost was staff time in calling up my account, and pressing the "go" button for the calculation - surely just a few minutes.

You will see that I did budget for 30 mins of staff time for the whole transaction.

With regards to releasing the deeds - this is a non-issue, as for a while now this whole system is almost entirely a paperless transaction, contolled by the land registry - i.e. there is no longer a physical document.

With regards to finishing my contract early, since my lender was Intelligent Finance, who were one of the first companies to introduce the concept of offsetting credit balances against loans, their main USP was the ability to repay your loans earlier - so although they might have a maximum lenght that the loan was for, it would be impossible to calculate a minimum period.

In addition, when I signed up the fee for this service was £50 - but later increased to £140.

Finally, my real point is that I don't object to being charged a fee, but just want to know what it is I am being charged for. I can't see any reason why my lendor shouldn't explain what the charge is made up of. If they could, I'd have no problem in paying it.

The trouble is the banking world in general is only very slowly coming to terms with the fact that it is no longer acceptable to hold customers to ransom when they can - a bit like the playground bully. For instance, if I ask for a business overdraft, to grow my business, which will increase my turnover and thus my bank charges, why should I be charged an arrangement fee, when I'm paying a fair rate of interest? And even if there may be some justification for an initial setup charge, what on earth is the justification for applying it again on the anniversary of the loan?

And really finally, and by now completely off-topic, I wonder just how many people who have business overdrafts are familiar with the term "hardcore"? I was dumb struck when it was explained to me that if, say, I had a £100,000 overdraft facility (with my home as security), if I was constantly making use of all of part of this, my interest rate on the overdraft would massively increase as it was now "hardcore" debt, whereas the interest rate quoted to me on the original overdraft was contingent on my account swinging between being in credit or overdrawn?

nemo183

Tootsie_Roll wrote:

A very simplistic view. You enter the cost of calculating the figure at zero !! What about the costs involved for manning that department, realeasing deeds etc etc etc. In addition to these you were ending a contract early seems only reasonable that you pay some penalty.

Just a quick question - if I am being over simplistic, how would you justify this charge?