Martin think before you talk!

Dan_Collins_2

Mr Lewis, I hear you have been on GMTV this week saying that N Rock customers should get personal loans to get the mortgage below 100% and then remortgage.

Personal loans are normally over a max of 7-10 with most lenders at 5 years. This would push the cost up in a big way. Also they could leave the unsecured loan with NR and change the seured part as this would be a max of 95%. The rate would go up but with the term set the term of the mortgage it may be more affordable.

I might be being picky, however I am losing faith, whats more more important, media profile or saving people money?

homer_j_3

There are 2 ways at looking at it.

If you can afford a personal loan for upto 30k and afford the repayment over a shorter period whilst considering the affordability of other commitments then it will save them money.

You could also argue that rather than credit check, you ask the lender if you can reduce your term on the unsecured loan to ensure more is paid off (or simply over pay the mortgage by the equiv repayment).

I think a lot of the issues I have with what Martin says is that there are too many bases to cover in the amount of time he has and also without giving information overload.

Dan_Collins_2

I think Mortgage advice int he media needs to be looked at. I hate over regulation but some of what you here is a joke and thepublic listen to the media.

chappers

Dan_Collins wrote: »

I think Mortgage advice int he media needs to be looked at. I hate over regulation but some of what you here is a joke and thepublic listen to the media.

Absolutely it's some peoples only source of information, if you took out a personal loan wouldn't that count against your affordability anyway.
So instaed of getting turned down on LTV you get turned down on affordability.
Anyway the way things are going it won't be long before a 95% LTV mortgage is at about the same rate as NRs SVR

dunstonh

Dan_Collins wrote: »

I think Mortgage advice int he media needs to be looked at. I hate over regulation but some of what you here is a joke and thepublic listen to the media.

The media can get away with printing a load of rubbish at times. If an adviser was to repeat it we would be at risk of a fine or getting compaints upheld. It does seem strange that the waiver exists.

It isnt anything new though. I have mentioned this before but the Mail many years ago encouraged people to invest in tech stocks and ran an article comparing tech funds with corporate bond funds. The returns at that point showed tech funds significantly beating corp bond funds but the article failed to mention that tech funds were very high risk and corp bonds were low risk. I know people that acted on that article who lost a lot of money and have no comeback at all. Whereas an adviser would never have got away with recommending that.

I havent heard Martin this week so dont know what the comments relate to. However, Martin does appear to be open minded and will listen. So put your case over and lets see what he has to say. You dont see Guaranteed Equity Bonds mentioned any more in his investment articles so we appeared to sway his opinion there (although ironically Premier have come out with a cracking GEB making it the first decent GEB I have seen since 1995 when the last good one appeared).

Dan_Collins_2

Wise words Mr D, as ever.

It bugs me thatnow I will get enquiries about this type of lending and in the real world a personal loan of 25k is actually hard to get. SOme borrow 30k and you cant even get that amount. When the payment will be £200 more per month and the plan goes wrong who's fault will it be?

I think the Media should just be a little more responsible.

homer_j_3

If you get any enquiries, you simply talk them about the alternatives and re-educate them that:

- By overpaying to the most they can or the lender allows will reduce the interest they are paying and reduce the debt more speedily

- A personal loan is not guaranteed and the rate you actually get is dependent on credit score. So the rate advertised is not always what is given

- There is no actual benefit in what has been said if they really think about it. The loan is unsecured still.

Dan_Collins_2

homer_j wrote: »

If you get any enquiries, you simply talk them about the alternatives and re-educate them that:

- By overpaying to the most they can or the lender allows will reduce the interest they are paying and reduce the debt more speedily

- A personal loan is not guaranteed and the rate you actually get is dependent on credit score. So the rate advertised is not always what is given

- There is no actual benefit in what has been said if they really think about it. The loan is unsecured still.

I get your point homer_j, but I am not worried about dealing with the enquiries, just the fact that I will get them.

Regarding the rock, I did a few were people borrowed more than 25k. One of the reasons NR did so well in that market was they would lend 30k unsecured. The secured part could then be 90% to get a better rate.

I just think people like Martin, who I do believe in the long run are doing good, would do a bit more research before getting on the soap box to boost a media profile.

Sorry this one has got my goat, I am fed up with having to pay for people's mistakes. OUr industry is in big trouble, lets not mess around. We have got another 12 months of this to get through, all because of the dealers getting greedy and the lenders laping it up. They can go to the BOE and ask for a few quid, if we run out of cash we cant!

MSE_Martin

Dan_Collins wrote: »

Mr Lewis, I hear you have been on GMTV this week saying that N Rock customers should get personal loans to get the mortgage below 100% and then remortgage.

Personal loans are normally over a max of 7-10 with most lenders at 5 years. This would push the cost up in a big way. Also they could leave the unsecured loan with NR and change the seured part as this would be a max of 95%. The rate would go up but with the term set the term of the mortgage it may be more affordable.

I might be being picky, however I am losing faith, whats more more important, media profile or saving people money?

I did find your comment amusing. First of all I have a weekly slot on GMTV - Im there whatever I say - so Im not quite sure how i was building up media profile.

Luckily I didnt just try to boost my media profile on GMTV I tried to boost it in my own weekly email last week and that's copied to you below, which should help explain it.

Of course on GMTV I didnt go into such detail (three minutes to explain the credit crunch, the impact on getting mortgages, how to find a new deal and what to do if you're trapped in means its about getting the gyst across not detail) though I did say that this was one soluton in some circumstances - the idea was to explain if you hit a wall - there are choices.

As you will see below this is a perfectly possible and sensible scenario for some

From my weekly email last week:

"Remortgaging if you've hit the nuclear option (Northern Rock especially). The credit crunch means many who’ve borrowed 95% to 125% of their house's value will simply be unable to remortgage and are stuck at higher rates. One solution is to get a loan to fill the gap. For example, if you’ve a 100% mortgage, borrow 5%, thus reducing the mortgage size and allowing you to move mortgage deals. Plus, some loans (see Cheap Loans) are cheaper than costly mortgages anyway (see Remortgage Guide). Sadly, it won’t always be possible to do this, and there's a chance it can hit your income multiple.

The Size of the Saving. Someone with a 100% repayment mortgage for £100,000 at Northern Rock’s standard 7.6% rate pays £745/mth. Getting a £5,000 loan over 5 years at 7%, which costs £99/mth, may enable them to get a cheaper mortgage - e.g. a 2 year fixed at 5.29%, costing just £572 a month. Over the two years, incorporating loan, mortgage and application costs they'd be £800 better off. Plus the £5,000 loan will be paid off much quicker than it would’ve otherwise, saving interest in the long run too."

Martin

EdInvestor

Dan_Collins wrote: »

Our industry is in big trouble, lets not mess around. We have got another 12 months of this to get through, all because of the dealers getting greedy and the lenders laping it up. They can go to the BOE and ask for a few quid, if we run out of cash we cant!

Same thing happens every few years zzzzzzzzzzzzzzz

Whenever the brokers and advisors do a bit of misselling and get into trouble, guess what, they blame the media.



Seen it all before.

Treadmill

Your example Martin

What happens if after the 2 year fix you still can't get a good deal when its time to fix again because of low equity in your property, possibly less equity than the first time you tried to get a deal if prices slump, do you borrow more money to get another "better" deal ? Even though you are still paying off the first unsecured loan for another three years, I'd suggest affordability would be an issue because now two years later you are on SVR again of who knows what and are still paying a loan that you got to avoid this exact situation... Sorry Martin but I really don't think you have thought this through.

A bloke at work mentioned this suggestion today and I thought he was winding me up, In his situation it was entirely unsuitable.