Superannuation

MarkyMarkD

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

Ah, you didn't say before now that this tie-in product was itself a "product switcher special".

And you aren't quite catching on to my point that a tie-in at SVR is a tie-in at SVR, irrespective of the level of SVR. It's no worse for you to be tied in at a 6.75% (or whatever) SVR than at a 4.75% SVR - if both SVRs represent the same rate compared to prevailing market rates.

Do you see what I mean? The only realistic way to compare rates for discounted/tracker products is the margin to Bank of England base rate - and SVR/base rate hasn't moved much over the past few years although it has widened slightly for most lenders.

[Deleted User]

Errrrrr...... not really ??? ???! When we had the discount, rates were low - since the discount ended, rates and therefore the Society's SVR have risen, meaning that the monthly repayments to the new SVR are much higher, as the current SVR figure is higher than the one against which we had the discount.

These are not the actual figures, but if I got a 1% discount on a SVR of 5% for 2 years, then no discount on a 7% SVR for 1 year, at a time when, in year 3, I could have been paying 5.50% to a new lender, I would not feel that I had a particularly good deal. I could have moved my mortgage twice by now, moving to the best deal each time - as a thank you for my loyalty, we have been tied to a SVR at a time when SVRs have been rising.

Maybe I am missing something here, but surely, in monthly cash terms, it would have been better for us (stuff the building society) to have been able to have our mortgage for the last year at a lower APR than being tied in to the society's SVR?

My point is that we have been shelling out wads of cash each month because of the tie-in that we would not have been shelling out if

A) there was no tie in, or

in recognition of the length of time we had been customers, as rates and therefore our payments were climbing, the tie-in was renegotiated, either in its duration or rate, or

C) we took our loan elsewhere?

If we get a discount of £x per month for 2 years, then in the third year are tied in to monthly payments £y higher, where "y" is a much higher figure then "x" (now over £150 pcm higher) we ARE making much higher payments than we could have been paying elsewhere; I fail to see how we have benefited in cash terms as most if not all of the savings over the 2 year period are clawed back or even exceeded in the year 3 tie-in. I repeat I am not remotely interested in comparing the saving for 2 years with the cost of the 3rd year tie in, to the same Building Society, I am interested in how much we have been actually been paying over the last 3 years compared with what we might have been paying had we moved our business.

If we had moved our mortgage 3 years ago, perhaps to one with no tie in, instead of being "loyal" to our lender I doubt if our total payments for the last 3 years would have been so high.

From now on when I hear the words "loyalty to" and "company" in the same sentence, I will remember the quote from Checkov in one of his finest works - "Shields up, Captain?" (Star Trek: the Undiscovered Country)

ANYWAY!!! To cut to the chase, the summary is - small saving for 2 years, hammered by the tie-in (during which time we found this site and bought Martin's book via one of the cheap ways recommended by him), could not renegotiate with lender, throwing toys out of pram, taking ball home and decided not to be "financial institution fodder" any more.

We told the society that we were 95% certain that we would be seeking a further advance as we need to extend our home by adding an extra bedroom, but even the prospect of more business, let alone keeping existing business, would not shift them. Up with that we will not put!

Without giving anything away about who we have been with, you don't by any chance work for the Dunfermline Building Society, do you?

MarkyMarkD

I certainly do not!

Really, the fact that SVRs have risen and hence the undiscounted rate is far higher than the discounted rate is by the by - it doesn't mean the SVR tie-in is costing you any more RELATIVELY than moving elsewhere.

On your example figures, if SVRs have risen by 2%, you could probably have got a 3.5% rate when you in fact selected your 1% less than SVR rate i.e. 4%. AND you bought a product with a tie-in at that time. You simply didn't buy the right product then because, as you've said, you didn't fully research the options at that time. I'm sorry about that.

And you have a strange idea of financial institutions' profitability if you think they can justify "rewarding" someone for their loyalty by letting them off a contractual tie-in, after giving them a discount for a few years. That might not have been a competitive product, but you have paid less than the even more loyal (some people might call them mugs?) who are still paying SVR.

I'm glad that you've discovered this site and that you are going to take increased care of your financial arrangements in future - the only response to the way that financial products (or any other products, in fact) are priced in a competitive market is to be aware of what's available and buy what's best for you - not to be hamstrung by notions of loyalty.

Good luck with your remortgage when your tie ends!

[Deleted User]

Thanks! 8)

I can feel a topic coming to an end before the men in white coats come for m......

Hang on, there's someone at the door ......

(transmission ends!)

WR