Should I take the life assurance offered with my mortgage?

ElleWoods

I currently don't have any life assurance but was planning on looking into which policy is right for me very shortly. I'm just in the middle of remortgaging and my mortgage advisor has said that I have to pay them a £299 fee for their services, despite telling me initially that their advice was free. However, they will waive the fee if I take the life assurance they offer with the mortgage, which will cost £10.27 per month. After initially saying I wouldn't be tied into this LA if I took it out, she then said I would be tied in for 36 months, meaning it would cost me more in the long run than the £299 fee. I protested against being tied in for so long and she's willing to reduce the tie in period to 30 months, meaning it'll cost me roughly the same as the fee. However, I will need to remortgage again in 2 years so I need to bear in mind that I'll be paying a fee then too (if I can't find a fee free advisor).

The life assurance is for £125k lump sum decreasing over the life of the mortgage. The mortgage currently stands at just under 90k so it will pay that off and leave about 30k for my toddler son (I'm a single parent). Is this a good deal - should I take this out at £10.27pm for two and a half years then look for another deal when the tie in ends, or am I better off paying the advisor's fee and looking for a better deal now?

It goes without saying that I'll be looking for a different mortgage advisor next time around due to the amount of incorrect information this one has given me.

Thanks,
CC x

shaunrc

Hi Cuba Cat

I am an IFA but please do not take this post as advice as this has a specific meaning for a regulated person like me.

I am sorry you have come across this type of behaviour.My suggestion is that you do the following.

1. You say that you have been given incorrect information. I would if I was you check everything carefully as attention to detail on mortgage deals is an important part of the job.

2. Challenge the advisor on the issue of the fee. Ask for something which proves you were made aware of this fee and point out that you were told it would be fee free. If I am going to charge a fee I ask my customers to sign a fee agreement so ask him/her for proof that you signed up for this.

3. As for the life cover without knowing your circumstances it is hard to say whether the life cover amount is right or not. But if your mortgage is repayment I can see how its level of £90k might need covering but how will £30k decreasing cover your son? If you die on day one he will get £30k but halfway throught the mortgage he might only get £15k. Any cover for your son should match his need which is unlikely to follow the pattern of a mortgage. This looks like lazy advising frankly as the product should meet the need.

4. As a general issue I make my living out of this and I therefore am in agreement that advisers need to be paid. However to hide it and then hit you with it when presumeably you are about to make progress is poor behaviour. If I were you I would ask them how much they are being paid from the mortgage lender. Have they disclosed this to you?

So in conclusion ask for proof that they disclosed the fee.Please post their answer on here as there are other steps you can take.

Good Luck!

dunstonh

However, they will waive the fee if I take the life assurance they offer with the mortgage, which will cost £10.27 per month.

£10pm premium will earn them about £800 commission.

Why not tell them you will take out the life assurance with them if they lower the premiums to make £299 commission to match their fee.

The method of remuneration you have mentioned is generally frowned upon by decent advisers and the FSA have proposed Customer Agreed remuneration as the solution (where you agree a fee and either pay by cheque and get a nil commision product or commission to the value of the fee is taken therefore improving the terms over full commission).

If the adviser does have a fee agreement from you for £299 then it surely cannot be treating customer fairly if they keep the £800 odd commision.

Retired_I.F.A.

£10pm premium will earn them about £800 commission.

About £180 in my time, what's happened to commission rates then ? £800 is a crazy amount.

ElleWoods

Hi everyone and thanks for your replies so far.

I'm worried that this isn't the deal for me, which is why I'm so reluctant to accept it and have to pay it for the next 2 1/2 years if it's the wrong product. That's why I'm wondering if I'm better off paying the £299, chalking it up to experience and never using them again.

I've already queried the fee and she said it was a new thing they brought in in January (my meeting with her was in early Feb). When I first made the appointment over the phone a few weeks prior, I was told it was fee free - I asked specifically about it. I was made aware of the fee when I got to the actual meeting - £99 fee for the advice given at the meeting and another £200 when the mortgage completes, hence £299. So they did disclose the fee, but only when I was there and already liable for a fee.

Another thing that doesn't add up is before my appointment with her I recommended the company to a colleague as I'd used them before and previously found them good - her daughter had a meeting with them only a week before my meeting and they are not charging her a fee. I'm very annoyed with being told one thing then another happens.

They haven;t disclosed how much they'll be paid from the mortgage lender - I'd feel a bit cheeky asking this, am I allowed?

I didn't realise they got commission from the life assurance as well as the mortgage - no wonder she dropped the tie in period when I said I'd rather just pay the fee than be tied in for so long!

CC x

dunstonh

They haven;t disclosed how much they'll be paid from the mortgage lender - I'd feel a bit cheeky asking this, am I allowed?

I dont believe it is required to disclose that unless you are on fee basis.

I didn't realise they got commission from the life assurance as well as the mortgage - no wonder she dropped the tie in period when I said I'd rather just pay the fee than be tied in for so long!

Yes, the life assurance will, in most cases, be the biggest earner for them.

ElleWoods

Hi everyone,
Just wondering if anyone has any other advice about this, as I need to go back to her today and let her know if I'll be paying the fee or taking the assurance.

Thanks,
CC x

payless

£10pm premium will earn them about £800 commission.

I wish, its much less ( even taking into account renewals)

payless

Cuba_Cat wrote: »

Hi everyone,
Just wondering if anyone has any other advice about this, as I need to go back to her today and let her know if I'll be paying the fee or taking the assurance.

Thanks,
CC x

think Shaun covfers it really.. if you really belive you were getting a no fee service, then I would not take their insurance anyway ...

dunstonh

Oops yes. I just checked a quote and commission on that premuim would be £240. For some reason I had £30pm in my head when postig that.

shaunrc

Hi Cuba

Good luck for today.

If I was you I would ask to speak to their compliance manager and point out to him/her the issue of how the fee has been treated and that you feel you have been treated shabbily. I would also ask why you are being charged a fee when others are not.

I would ask them what the procuration fee will be ( what the lender pays them). If they ask why say you want to know because of what has happened.Any bonafide adviser would tell you straight away if you asked.

It is possible they have a minimum income from a case as this is why they are doing this but they should have said that at the beginning not once they had dragged you in.