CASE STUDY 1
Susan owns a property with a current value of £230,000 on which she had a mortgage of £90,000. This had just come off a fixed rate and returned to the standard variable rate that was 5.5%.
Her mortgage was an interest only mortgage making the monthly payments £412.50. In addition to this Susan had £22,500 in credit card debts which she was paying on average of 14.9% interest and on which the monthly payments were £450. She also had a personal loan of £7,000 relating to a car purchase that was costing a further £410 per month and a personal overdraft of £1,000. This meant that Susan’s monthly payments to service the various debts was £1,272.50. This she was finding unmanageable and she asked us for help in reducing her outgoing.
We remortgaged the property taking out a 16-year mortgage to tie in with the maturity date of her existing endowment policy. We used the remortgage to raise £35,000 from the equity in the property and made the new borrowing on a repayment basis over the same term. The mortgage that we recommended was a fixed rate over the next 2 ½ years at 4.90%. The combined monthly payment on this new mortgage was £584.62, a monthly saving for Susan of £687.88.
CASE STUDY 2
An 11th hour case – Mr Harris.
There are some excellent fixed rate mortgages still available and we have the great benefit of being in a position of scouring the whole market to find the appropriate deal - even at the 11th hour!
One client had secured a mortgage offer on his own with Northern Rock for £290,000. It was at a fixed rate of 4.69% for a new house purchase in Weston super Mare. The purchaser was set to exchange in 4 weeks from the time when we were introduced. We researched the market and sourced an alternative deal with Bristol and West who offered him the same funding level but on a cheaper rate of 4.39%. We arranged the valuer to retype the original lender’s survey for £35 and the net saving monthly was £72.50. Factored into the overall costs of the deal, we secured the mortgage offer in just 10 days, saved the client £1,416 over the 2 years and he still had the offer in plenty of time for exchange of contracts. It pays to shop around even at the last minute! He subsequently requested we review his associated mortgage protection and we conducted a similar exercise saving him money over a contract he had sourced on the Internet.
Moral of this story: we can beat mortgage online providers AND provide full advice and service.
Mortgage complaint case study – more from Regent in action.
This is a mortgage endowment complaint
case. A couple came to us, because they were very unhappy
about their under performing endowment policy.
Over 10 years ago they had been sold an interest
only mortgage of £65,000 repayable by an endowment. At
the time they were not made aware of shortfall risks even though
their incomes were never likely to grow to such a size that
they would find it easy to make up any shortfall in the endowment
payout.
Fifteen years later they were appalled to discover that the endowment at a growth rate of 4%, was now only projected to reach £26,300 by the date that their mortgage needed to be repaid. They had paid in £9,900 to their endowment and the surrender value was only £6,993.74. They still had £65,000 outstanding on the mortgage. The clients were facing a shortfall of £38,700. On their incomes this was not easily remedied.
It was our consultant’s view that this couple was quite likely to be entitled to compensation for poor advice from the insurance company involved. This was duly applied for and it was subsequently agreed that this was the case. As a result the endowment provider agreed to compensate them such that, had they been on a repayment mortgage all that time, they would have paid off the same amount of capital.
They also agreed to pay them all the costs of arranging a remortgage. Compensation of £6,000 was offered to them, plus an enhanced surrender value on the unit-linked endowment of £9,000. This was accepted, and the clients were able to pay off £15,000 capital against the mortgage. The current lender on the mortgage was only able to offer a fixed rate of 4.99%; in addition there was a 1% penalty for switching products before the end of the fixed term. We were able to re-mortgage on a repayment basis, with all rearrangement costs paid for by the endowment provider, and on a fixed rate of 4.25%. Our couple now only need to keep up with their repayments for full certainty that their mortgage will be repaid at the end of the term.
