Superannuation

[Deleted User]

Mrs Wild Rover and I both work in jobs where we have Superannuation Pensions - we are going to have to remortgage over the next few months as we are seriously hacked off with our current providers (who have held us in the vice-like grip of a tie in at the end of a deal, to the extent that even when we said "renegotiate the tie-in or we assure you that we will leave at the end of it" they said NO! ).

Part of every mortgage deal that we have seen is the inevitable insurance policy, yet if either of us dies before reaching retirement age the lump sum would easily wipe out the outstanding mortgage - we would much rather the additional wad went into repaying the debt, not buying additional insurace that we don't think we need!

Anybody know of a means of using our Superannuation arrangements to our advantage? ???

dunstonh

You cant be looking at the right mortgages then as most have no compulsion to buy any insurance.

I'm sure payless or mortgageman will kick in with some good mortgage options which have no insurance compulsion.

MarkyMarkD

Mrs Wild Rover and I both work in jobs where we have Superannuation Pensions - we are going to have to remortgage over the next few months as we are seriously hacked off with our current providers (who have held us in the vice-like grip of a tie in at the end of a deal, to the extent that even when we said "renegotiate the tie-in or we assure you that we will leave at the end of it" they said NO!  :o).

Part of every mortgage deal that we have seen is the inevitable insurance policy, yet if either of us dies before reaching retirement age the lump sum would easily wipe out the outstanding mortgage - we would much rather the additional wad went into repaying the debt, not buying additional insurace that we don't think we need!

Anybody know of a means of using our Superannuation arrangements to our advantage? ???

I don't see why you are complaining about being held to the contractual terms of your original mortgage product. If you've had the benefit, you should expect to suffer the tie-in.

And as DD says, there are few mortgages which make you buy any insurance (life or property) these days, particularly if you can demonstrate that you have sufficient cover through your employment.

One point that people fail to consider, though, is that if you become ill so you cannot work and consequently get the boot, you may lose your "death in service" benefits and then be unable to replace the cover at reasonable cost. Even though with a decent employer you should get some ill health pension you will still normally lose the life cover. So it's not the safest thing to rely on.

Robert_Sterling_3

One man's vice like grip is another man's terms & condition so I agree with MarkymarkD
I also agree with DD.

[Deleted User]

Hmm... seem to have touched a bit of a nerve here! ::)

My first responsibility is to the financial (and other!) wellbeing of my family, not to the financial institutions - how often are we advised here and elsewhere that "if you don't ask you don't get?" Yes Ts&Cs ARE Ts&Cs - but a customer of over 15 years IS a customer of over 15 years, and like most of the population years ago, we subsidised other folks' "special offers" by not even realising that we should shop around. How things change ;D !

As a consumer, threatening to take business elsewhere is just about the only weapon in the armoury, and I will make no apologies for trying to use that weapon, or actually using it if the institution does not come up with the goods! If we all followed the "just lie back and take it" approach most of the helpful advice on this site would never be put to any use. I'd ask you not to be quite so quick to stick up for the big guy!

The fact that a large institution couldn't see that they were facing losing a "valued" customer, when all they had to do was come somewhere close to giving us a similar deal to those that they were offering somebody walking in off the street was what irritated us.

Meanwhile - thanks Marky MarkD - that was a fair point about the ill health position - I suppose I am as guilty as anybody else about assuming all will be well -something well worth adding into the equation. We are in the position of looking at all our options and based on the guidance here we have already done reasonably well. We will put an item in the "how much have you saved" section reasonably soon, so far over £100 off car insurance, a hideous (estimated) £300 pa on phones - can't do the mortgage yet BECAUSE OF THE TIE-IN >:( >:( and it is ages since we have paid interest on a credit card balance. We have just got an egg card as well so I can feel a SBT coming on!

I am still a bit new to this new approach to finance, being one of the ill-advised folk who has been with the same bank for over 20 years! Still also feeling a bit sensitive about the "baddies" as we have a mis-selling case on the go at the moment - we have a question about an offer of compensation elsewhere on the site, but no replies on that one yet.

Thanks again folks!

MarkyMarkD

Oh, fair comments Wild_Rover. I'm not saying that people shouldn't attempt to do the best for their families' wealth and well-being - of course I would do the same.

But equally well, if you buy something like a discounted mortgage, you should go into it with your eyes open and expect to stay for the time the Ts & Cs specify. Essentially the Ts & Cs are there to enable the lender to offer the discounted product but still to make a little bit of money on the loan! Otherwise everyone those who would take the incentives and run would "spoil things" for the more loyal customers - as, of course, to a large extent they do now, but to an even more extreme extent.

[Deleted User]

Agreed! The fact is that the tie in was for a year and to the standard variable rate - at the time we took the deal on, interest rates were low - we are now paying over £150 more per month than we were during the discount >:( so any cash saving we made when interest rates (and therefore the cash effect of the discount) were low have probably been wiped out during the tie in period. I feel that they are making more than a little cash out of us now, as we have been tied in at a time when rates are rising and we can neither get out without selling an arm and a leg nor renegotiate with our current lender!

(Sill had no replies to my "mis-selling claim" question elsehere in the Mortgages and Endowments subjects list - the suspense is killing me! :P

MarkyMarkD

If the discount was x% off the standard rate, then you saved the same amount irrespective of what level interest rates were at.

I don't know the details of your deal, but many (most?) tie-ins are not really exploitative IMHO.

Even Northern Rock, who have some of the longest over-hanging tie-in products, only do so to afford big up-front discounts/rebates.

e.g. 6% cashback with 6 year tie-in - so that's like a 1% discount for 6 years except you get it all up front. So your net rate is around 1% over Bank of England base rate.

Or other lenders' low-start products - say 2.5% discount for two years followed by a year's tie-in at standard rate. The average rate over three years is 1.67% off standard rate which is around 0.30% above Bank of England base rate. I don't call 0.30% a lot of profit.

[Deleted User]

Getting slightly off the original topic here but it is getting interesting! ::)

I note what you say - the bottom line is that we have to reduce our payments to the minimum possible, and in the same way as with mobile phones, car insurance or tins of tuna, I see no reason to pay more than I have to for any product, financial or not. The company is obviously content to see a customer of over a decade leave, and I assure you, I am as content to leave them!

We would have been quite happy to come to a deal with them but that willingness was not reciprocated. The savings comparison I was refering to was between our present payments and what we might have been paying elsewhere. We were even willing to consider a smaller discount in exchange for a reduction in the length of the tie in, or anything else that they might have put forward, but we would have been better negotiating with the wall.

As I have said elsewhere, withdrawal of our business is the only weapon we have, and we are perfectly willing to use it. It will be a pity to break a long association (get the hankies out ) but if the companies do not want to negotiate with their customers when the marketplace has changed and they no longer are competitive, they can hardly complain if the customers take the hump and go elsewhere at the earliest opportunity.

Now that we are coming to the end of the tie-in, yesterday they graciously offered us 2 options - 5.6% fixed rate until 31/1/07 (6.7% APR) or 1.24% discount for 5 years (5.5% Variable, 6.5% APR) - a quick glance at the examples given in our local paper shows that they are still offering us a poorer deal than they are offering newcomers, and the two other offers from other Building Societies in the same paper look better (let alone doing more research using the contacts in this site and elsewhere on-line) - what would you do? ???

MarkyMarkD

I would certainly be binning them off and can see your point of view. But equally well I can see the lender's as regards enforcing the original tie-in.

Any sensible borrower looks at the true cost of a loan over the period they intend to keep it for. If you had done this when you bought your tied-in deal, you probably would have bought something else IMHO.

Or if you still would have considered it the best deal, over that extended tie-in period, you shouldn't now be moaning about the tie-in!

As for lenders restricting their best products to new customers, this is very unfair and counter-productive as in the long run it just leads to customer resentment.

Some lenders (hard to think of them off the cuff, but Nationwide, YBS and A&L for definite) allow existing borrowers access to all products. If I was buying a new mortgage now, it's one of the questions I'd ask: "can existing borrowers switch to the same products as are offered to new customers".

[Deleted User]

Thanks - we'll certainly add that to the list of questions.


It is now painful to admit it but we didn't really shop around when we took the current deal on :-[ - we just phoned saying "we see other offers are around - what can you offer us to stay?" and picked one of the 2 offers they gave us. At the time it didn't look so bad, and as interest rates were quite low, a tie in the the standard variable rate didn't look too grim.

I still don't think that the majority would think 2 years in advance that they would be unlucky enough to find the rates climbing virtually month after month immediately after a one year tie-in to a standard variable rate started. Well we know now!

Regards

WR