Why people should consider protecting themselves.

Zoetoes

homer_j wrote: »

Good question, firstly, you will not be chucked out after month 1 - you may get upto month 6 before this happens - or later. Over this period of time, your equity is decreasing due to the simple fact no payments are being made.

You then need to pay the admin fees that are being constantly added. Once again decreasing the value.

The lender will have instructed solicitors by month 3 on average. Guess who pays these? Yep - you, not the lender.

They then start adding admin fees on admin fees and more legal costs as they draw their legal documents together for preperation for court. More cost.

You eventually get evicted - you are still responsible for the mortgage and the debt is increasing by the day.

The lender then gets the baliffs in and locksmiths to secure the property. Guess who pays for these? Yep - you again.

The lender then puts the house on the market. Thats estate agency fees, I don't think you need to ask who pays these.

The house will be sold at best at least 6 weeks and your mortgage interest is racking up. You could be sat on there for 2 or 3 months. All this time your equity is decreasing.

Lets presume you are lucky and you get full market value, the lender then needs to get the solicitor to do all the legal work for that. More cost to you.

So as you can see - the cost of being repo'd is a lot more than your landlord simply telling you to sling your hook.

So lets presume you have some money still left at this point - you approach a landlord for renting, they ask for references? You show them your mortgage statement - whoops. You explain that you fell on bad times and they say that they will credit check you - whoops. You will need a massive deposit if not a whole 6 months of rent.

You can imagine that this is the good scenario. No equity with these 125% mortgages, or little deposits and you are well and truly stuffed!!!!!

Homer - since I've printed this off and used it in my appointments with customers, I have sold critical illness cover to every single person I've had sat in front of me. Talk about disturbing a customer!!!

dunstonh

Do any of the advisers remember the old video that used to be shown "the widows tale"? I saw the late 80s/early 90s version and it almost had you in tears at the end.

homer_j_3

Yes I have seen that - must have been more modern and its up there with glengarry glen ross as that made me cry too when someone dare complain about leads lol

coffees' for closers - might change my signature actually

dunstonh

From what I understand, they update the video every 5 years or so to modernise it. Although the one I saw was 80ish, it came across more like 70s. Wasn't very politically correct as it gave impression that moving from a nice detached house in the suburbs with the family all sitting for breakfast being happy and smiley to being forced to move into council high rises with the unwanted and was like being sent to hell. Watching the family and lifestyle turn rotten and all because they had to go onto a council estate because the husband died and wasn't insured.

Joking aside, it is very hard for people to move down the social ladder (for want of a better way of putting it) once you have experience of a better lifestyle. Losing the car, the house, the lifestyle once you have got used to it can hit people very hard.

mdstevensuk

robwend wrote: »

without being rude but you guys saying we should have mortgage protection is all well and good. but i think in marias case it sums up alot of people that i lack sympathy for. ....they have loads of loans debts ect and dont think ahead. i owe nothing but my mortage, all my freinds are maxed out to the hilt! but i know when the rugs pulled away from me if ever il be ok, i can always go on intrest only mortgage and start again

not everyone such as myself can help having debts, due to divorce i had to take out the loan so that my children and myself had a roof over our heads.

jamesd

Consumers reading this should be aware that there's increasing interest in the mortgage broking business in selling insurance to raise profit margins: brokers are looking to sell it to you to make more money from you.

You can and should look for the best buy insurance, not just buy from your broker or lender. Also note that a whole of market mortgage broker may well be a tied agent, not independent, when it comes to selling insurance. And tied agents are best avoided for financial purchases.

homer_j, thanks for that reminder of how insurance used to be sold with scare tactics.

zoeleigh wrote: »

Homer - since I've printed this off and used it in my appointments with customers, I have sold critical illness cover to every single person I've had sat in front of me. Talk about disturbing a customer!!!

Thanks for posting that.

Lets catch consumers when they are uncertain and vulnerable seems to be alive and well in the industry.

HelpWhereIcan

jamesd wrote: »

Consumers reading this should be aware that there's increasing interest in the mortgage broking business in selling insurance to raise profit margins: brokers are looking to sell it to you to make more money from you.

Correct, but the full explanation should also include a reference to the FSA's increasing requirement for Mortgage Advisers to show they have discussed protection with customers.

If/when the property downturn comes, advisers do not want to be faced with "job half done" "mortgage sold on cost alone" (Interest only?) "you should have told me" type complaints.

But agreed, A SMALL MINORITY are focussing on it now just for reasons of income and (because they have not come from a Financial Adviser/IFA background or because they are using a menu sale system) they may not know as much as they should about the correct way to build a protection package for a client.

jamesd wrote: »

You can and should look for the best buy insurance, not just buy from your broker or lender.

Agreed 100%

Make sure that you compare plans on a like for like basis - not only in terms of number of conditions covered, but also things like definitions, exclusions, options, claims history, financial strength, policy on non disclosure etc etc.

This will ensure that you get a 'best buy' not only in terms of monthly premium, but also in terms of quality of cover. After all, an insurance policy is only as good as what it pays out.

jamesd wrote: »

Also note that a whole of market mortgage broker may well be a tied agent, not independent, when it comes to selling insurance. And tied agents are best avoided for financial purchases.

Goos point and agreed 100%

jamesd wrote: »

homer_j, thanks for that reminder of how insurance used to be sold with scare tactics.

A bit harsh on homer as he was answering a direct question and trying to point out the reality of a particular situation outlined by another poster. There are many boards and post accross the internet to illustrate the point he was making - having a property repossessed is the most expensive way of getting out of a mortgage commitment.

But, no insurance should be sold using scare tactics. The adviser does not benefit in the long run as commission is clawed back when the customer cancels the policy after a year because they can no longer see the need (they have forgotten the scare tactics).

BTW, the 'widows tale' video being referred to was used as a training video for advisers and not used in front of customers. I have actually seen someone who's real life experience pretty much matched it, compromise for compromise; but most people would not believe it if you told them. Ho hum

jamesd wrote: »

Thanks for posting that.

Lets catch consumers when they are uncertain and vulnerable seems to be alive and well in the industry.

I would agree that homer's scenario is not relevant to everyone and a conversation about protection should be tailored to the customer's situation/personal risks and the type of cover being looked at. But if you base your comment on the term 'disturb' you are being a bit harsh.

The term is used in every industry to describe the process of making a customer aware of the risks involved/reality of a situation.

e.g you 'disturb' a customer to ascertain their attitude to risk in investments by saying, "if your investment fell in value by 30% how would you feel?".

The diet doctors on TV 'disturbed' me last night by showing me what a fat, unhealthy knacker I have become and how I am reducing my chances of walking my daughter down the aisle by having this doughnut (or two) for lunch.

If an adviser explains the risks to someone of, say, a critical illness and the customer says they are willing to take the risk, then fine. At least the adviser has done their job and made the customer aware of the risk. Just please do not focus on the term 'disturb' to infer an underhand practice.

Are Macmillan Cancer Support guilty of the same practice?

http://www.macmillan.org.uk/Get_Involved/Campaigns/Better_Deal/Latest_news.aspx

Having said that, they could be in league with firms of Mortgage Advisers!!! :rotfl:

As usual james, a good balance to "the adviser view". Just a little harsh on a whole industry really.

jamesd

I agree that the whole industry isn't inclined to work that way and yes, I'd say the same about some charities.

homer_j described the case of a consumer who completely ignored their changed circumstances, didn't pay any of the mortgage payments and ended up substantially worse off than they could have been.

Alternative scenarios may involve a reserve of savings of three to six months of salary, telling the lender about the situation and arranging to sell on your own over the course of the year or more that may be available as a result of this modest amount of prudence.

The consumer may have substantial equity built up by overpaying or investments intended to pay off an interest only mortgage. That money can be released through sale or renting of the property, at the cost perhaps of switching to a less desirable property.

The situation is still likely to be very hard if one of the partners has never worked or is unable to work and life insurance remains a good idea. PHI may also be useful, since death is not the only risk in life.

Dunstonh made an excellent point about lifestyle.

homer_j_3

just to clarify Jamesd - I do not use scare tactics as you call it. I make my client fully aware of the consequences of not having relevant protection in place.

Part of the advice process for me is fully understanding my clients existing protection policies in place - these include sick pay, death in service cover and other policies that may be continued for the purpose of protecting the mortgage. I will consider existing savings etc also and I provide a professional approach to ensuring that my clients are protected.

Now with regards to my response about what happens when a reposession takes place. I make no apologies for anything in that post - that is what happens and is reality. I am not making anything up - if the truth scares you then I have done my job.

If I was to say "oh dont worry about reposession, you can just rent" and then it happen - where does that leave me? I would be faced with a claim against me for not letting my client understand the full risks of what they are getting themselves into. That is the scary situation to me as I have allowed that to happen.

I do not hold a gun to my clients heads nor do I assume that they think about what would happen if a death, critical illness, loss of income happens.

You will see from this post, I have actually financially benefited one poster through my knowledge and job and given them a pretty substantial boost to their finances. Did that shock you that I did.t scare him into considering keeping the cover because he could still benefit from the cover potentially from their next mortgage?

At the end of the day, I have a duty of care to my client and whilst I do earn money from the insurances that I provide, I only provide to my clients needs. I do not give them cover for the sake of it. You have to realise that people in the real world very rarely have sufficient savings or overpay their mortgage. You are thinking as a MSE'er and not everybody feels this way.