Martin think before you talk!

itsnever2lateisit?

I can see this from both sides, the reality is Martin is seen by many as a champion, and what he says is Gospel (Not Martins fault, more fool the listener IMHO) Talking money saving on Phones (as last night) and mortgages is chalk and cheese. But anyone acting blindly on the 'say-so' of a 3 minute TV slot on what is the most important financial decision of their life has only themselves to blame if it all eds in tears.

Having said all that the events in the mortgage market that have unfolded since the article was broadcast (FD/Coop and the BoE survey this morning) renders it of historical irrelevence now

jamesd

Martin, it seems that you were covering the required ground, particularly given the constraints of the medium and the amount of information you had to convey.

TighterThanTwoCoatsOfPain, CPI was 2.7% during last year to November. RPI for the year was 3.9% last month. Average pay rise was 4.1% for last year to October.

You might also remember the fuss about linking pensions to wages instead of RPI inflation because wage inflation is higher than RPI inflation.

Not all employees will see such increases but many will, or will be promoted and get an increase that way.

sukysue

MSE_Martin wrote: »

Hi folks,

What amuses me about the above discussion on my GM-TV slot. Is my main answer was "never go to your bank and building society for advice - do this through a broker" yet what's been picked up here is the reactionary bit about the loan example; which is a realistic and practical option for some people.

Perhaps you're right though - having read the above - if i've less time - i should cut out telling people to go to brokers! The reactionary nonesense I read above really is very silly!

Of course I'm being facetious, but really I find this whole conversation quite ridiculous and offputting. And think a few of you may want to pull back slightly on some of your comments.

Martin

:T
Go Martin!

nixinix

Hi all,

I would consider myself an average person but I am not on the ball with money, as I do like spending though my only debt is a sensible mortgage so not too bad. I am also a stay at home mom so any ways of saving money are considered. Enough about me, back to my point....

When I see Martin talking on tv I am usually inspired to go find out more and research the best option for me to save money. In other words, the details of what he is saying are almost irrelevant (sorry Martin!) and I just use it as a starting point.

If that means others like me pick the phone up and start talking to a financial advisers surely that is a good thing.....? And if those IFA can help us save money by choosing new products (even if it is a different route than Martin originally suggested) doesn't it normally mean the IFA is earning more money - so we are all happy....hold on...Martin you should be asking for commission!

missk_ensington

Treadmill wrote: »

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.

I think Martins example was 'last resort' if the only other alternative is getting repossessed then what does it matter? You might as well give it a try. If you dont tyake the loan you lose everything cos you cant remortgage and cant afford rate, if you do get the loan you'l probably lose everything as you've described but there's a chance you might keep your head above water and ride it out til the markets improve and hosue values go up again

Dan_Collins_2

LOL This thread got out of hand. Maybe I should have slept on it, I may have not been so harsh! Then again who cares!

green1970

I think the key thing is with NR that you already have a secured loan at 95% or less and a personal loan for anything above that, so you already have the personal loan which should allow you to move lender. I suppose what the guys are trying to say is why risk trying to get a personal loan from elsewhere at a much shorter term, risking additional searches on your credit file, probably making it much less affordable than keeping the NR personal loan as is and just remortgaging the secured part to another lender (not that a 95% remortgage is an easily achievable thing at the moment, but it will be easier with a smaller monthly payment on the personal loan part). I would think that applying elsewhere for that personal loan may make it harder to remortgage and thus may even be construed as bad advice.

Did that make sense? Don't make it personal on here - the advisers have a good relationship with posters and Martin alike. It's a difficult time out there and it's only getting harder at the moment. Let's pull together and work out what's right for these NR customers.

HelpWhereIcan

I have to say that my recent experience bears out what Martin was saying as the desireable thing for many people.

Whether something is actually possible due to credit rating, personal loan lender criteria etc is another thing. But that's where researching all your options come in - you start off with the one that is best and then find out which one is possible.

My experience is that leaving the unsecured portion with Northern Rock at 12.59% is horribly expensive and the extended term does not make the difference you may think it should.

Take the following figures from a real life case I had recently:

Property bought in 2005 for £166000.

Together mortgage over a term of 35 years at 5.89% fixed for 3 years.

£149400 Mortgage = £838.29
£ 30,000 Unsecured Loan = £168.85
Total Together Payment = £ 1007.14 @ 5.89%

Payment on SVR = £1221.14 @ 7.59

Current Property Value £170,000

Current Balance = £174000 (of which about £29000 is unsecured)

Option 1 - Keep the unsecured with Northern Rock and Remortgage rest

Remortgage £153000 (90%) @ 5.83 5 year Fix, 32 year term = £ 880.20
Remaining Unsecured £21000 @ 12.59 variable 32 year term = £ 224.40

Total New commitment £ 1104.60 (an increase of 97.46 but still £116.54 cheaper than SVR).

Approx total amount payable over term = £424,166.40*

Option 2 - Take everything elsewhere to get best poss market terms.

Remortgage £153000 (90%) @ 5.83 5 year Fix, 32 year term = £ 880.20
Remaining Unsecured £21000 Tesco @ 7.7 APR, 10 year term = £ 296.25

Total New commitment £ 1176.45 (only £71.85 pm more than Option 1 and still less than SVR with the security of a 5 year fix and unsecured over a much shorter term).

Approx total amount payable over term on mortgage = £337,996.80*
Total Amount Payable on Loan = £ 35.550

Approx Total amount payable = 373,546.80 - A full £50,619.60 cheaper than option 1 for a little extra a month. This also completely ignores any overpayments that could be made in 10 years when the loan is repaid and saves the customer £296.25 per month that Option 1 does not have. Option 1 has a greater risk of dooming you to pay more.

*For ease, assuming that the rate of 5.83% is the rate payable for the rest of the term ... don't start!!!

For most people to qualify for Together itself let alone the enhanced income multiples you had to have a good credit score. Most people's scores and incomes should have improved over the period rather than declined.

The max unsecured was only ever £30000 so most people should be able to make enough inroads into their 'negative equity ' by switching the unsecured lender to make a remortgage on decent terms possible.

My customers above had no problems getting the unsecured loan and actually chose to go with Asda(IIRC) over 7 years and pay £373 per month as this gave them a similar payment to SVR but because they were fixed for 5 years they felt comfortable committing to that amount.

Dan_Collins_2

You must be quiet! ;-)

homer_j_3

I think Dan has focused on one issue which may in his hindsight not have been the right one to focus on.

However, the greater issue does exist with the media.

Martin, well done for putting your point across in the time you did and thank you for mentioning that they should seek advice - I did not watch the slot so was not aware of this but if people remember to do this then at least you have gone further than most journalists do.

I have no issues with your comments if people do seek professional advice because this will allow the consumer to make an informed decision based on their specific needs.

Its just those that do not seek professional advice and do not fully get the gist of what you are doing.

Its probably fair to say that our regulatory system has been built on the 2 feet - 1 being that that we have to assume that every client will not have common sense nor remember everything we say and 2 being that there are people out there that will take advantage of those people if they get a scent that there is an opportunity to do so.