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If you had £7k would it be a better idea to put it into your mortgage

38 replies

ssd · 26/08/2006 21:39

or keep it in a savings account?

would you be able to get it out of your morgage at a later date if you needed it?

OP posts:
SenoraPostrophe · 26/08/2006 23:01

I knew a few IFAs in the 90s and they did indeed seem to think they were selling the right thing, but only because they hadn't actually bothered to research anything. and while they didn'y usually deliberatly sell the wrong type of product, they did sell the policy belonging to the company who paid the most commission - and I don't think that even now "Norwich union would have given me a better deal" is a valid mis-selling reason is it? I thought at the time they should ban all commission on finiancial products, but they haven't.

SecurMummy · 26/08/2006 23:02

I don't blame you Ursula, but the fact is that the advisres did not know! Really it is the companies that got it wrong, not the advisers.

I am sure that if you argued for a repayment mortgage then he did not do his job right (after all he is an adviser not a dictator) however, advisers didn't lose their jobs over his because they did nothing wrong! The literature told them that these things were the dogs.! You can only advise based on the information you are given.

UrsulatheSeawitch · 26/08/2006 23:05

No, they didn't know that the market would go the way it did, but it was always a possibility, wasn't it? And that possibility was played down to the point of silence in many cases.

SecurMummy · 26/08/2006 23:06

SP, if you mean "norwich union paid me more commision" the YES IT IS VALID MISS-SELLING. and YES YOU CAN TAKE THAT TO THE FSA!

You would not believe the hoops that have to be jumped through if a client decides they like one company which is not the best deal (ie all my policies are with AXA so I want this there too) often this includes the FSA/mother company phoning the client to check it has not been mis-sold.

SecurMummy · 26/08/2006 23:09

Yes and No, basically, yes things change etc. However, the advisers were told, catagorically that this could not happen, so they sold on that basis. (which is all anyone could do!)

SP. re; commision, yes in the 90's things were like that with some advisers, now they are very unlikely to get away with it. The governing of the entire industry is now ridiculous to the pint of being very nearly unworkable.

FullOfTestosterone · 26/08/2006 23:09

SSD,
If you don't have an ISA, I would do that first - because it is interest free money for the rest of your life.
After that I would put in your mortgage if you don't pay a penalty for it.
You can actually can save quite a lot of money, because not only you reduce by a little bit your repayment everymonth, you can significantly reduce the interest.
Play with a mortagage calculator to see the effect of paying your mortgage.

We did this recently (pay off our mortgage using our savings, and reduced our mortagage by 5 years!

ssd · 27/08/2006 07:57

thanks for all advice here.

I think I should speak to a financial consultant, but I'm insure how to find one that doesn't charge me. Any ideas? Also how does he make any money if he's just giving me advice? Don't want to waste his time!

OP posts:
Gingerbear · 27/08/2006 08:12

We have just re-mortgaged - with an offset mortgage fixed rate deal. We had £20K in savings. It was earning 4.5% in a savings account. The mortgage interest we were paying was 6.3%. In effect we were paying more in interest on the mortgage than we were earning on the savings. We have put the money into the offset account, saving the interest on 20K off the mortgage, and the money is still there if we need it.

ssd · 27/08/2006 08:22

who are you with gingerbear?

that sounds good/

OP posts:
SenoraPostrophe · 27/08/2006 10:57

ok, sm, point taken. think I was a bit wound up last night (also these ifas were not excatly what you'd call friends as you may have guessed).

SecurMummy · 27/08/2006 17:17

SP and Ursula, sirry I am not normally so determined in my defence of the breed - I think I was just surprised to hear it from Ursula which is no excuse really! Sorry again!

SSD, an offset mortgage could be an excellent solution, as I say it really deoends on what you want to achieve from this. A non-charging IFA will get commisions, so if you decide to do your ISA or mortgage or whatever with them then they get commision. If you don't they get nothing - but that probably means they have not done a very good job of helping you IYSWIM!

If you do think that an offset could be the way o go then The One Account has been considered the best one around for some time because it offers great flexibility, however there are others out there.

Good luck!

Gingerbear · 27/08/2006 20:40

hi ssd, been out all day, just got back to computer. I rang London and Country mortgage brokers, told them what I wanted and they found the best deal - It was a fixed rate 3yr deal with first direct. L&C are commission free - and they clearly state how much commission they get on any mortgage they recommend. Many deals are only available through the broker.
London and Country

Gingerbear · 27/08/2006 20:41

oops, mean fee free, not commission free.

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