Questions of Cash: Suddenly, a mortgage cost me £170 extra

Q I've just applied for a two-year fixed mortgage with Lambeth Building Society. Your best buy column quoted the fees as £390, which Lambeth also gave me on the phone. While processing the application Lambeth said I must pay £170 more as the valuer's fee. Were you were aware of this? I feel deceived.
SW, by e-mail.

A Lambeth's arrangement fee (which they call a "reservation/ application fee") is £390. The valuer's fee is treated separately, as is normal practice. The exception is where a lender may offer a free valuation. Lambeth makes the point that the detail on the fees is "clearly stated on the product sheet" which you "would have received ... when applying for the loan".

Ray Boulger, of broker Charcol, says it is not practical to include the valuation as part of an inclusive fees figure because valuers' fees are normally charged as a proportion of a home's value.

Q I have a Lloyds TSB Platinum credit card. I pay the full outstanding balance each month by direct debit, yet every month there is a small interest charge added. I have enquired about this twice. The first time the interest was refunded, the second time I received no reply. The small print is unclear.

In one place it says: "If you pay us the full amount in time to credit your account by the due date you will pay no interest." In another, it says: "Credits received four clear working days before the date shown will clear entry."
Can you explain why interest is charged on statements paid in full by the due date when there has been no cash advance? DH, Richmond

A The problem is not with the processing of the payment. The interest charges relate to cash withdrawals from earlier periods. When cash is advanced, interest accumulates from the date of the withdrawal and charged on the next statement. Interest on the interest will be charged the following month. This is standard practice.

Q I am in a well-funded final-salary scheme, and aiming for early retirement. I wish to convert some of the income into cash to pay off the mortgage. The scheme's conversion rate of £9 cash to every £1 surrendered has been unchanged for years. With annuity rates down to 5 per cent, surely the conversion factor should be much higher?
JR, London.

A The so-called "commutation rate" of £9 for every £1 is normal for men and explicitly permitted by the Inland Revenue. The usual figure for women is £11 because they live longer. The Revenue's involvement is because the lump sum is tax-free and it is keen to avoid abuse. The rate varies according to age. Some schemes authorise an actuary to apply a commutation rate reflecting the actual state of the fund.

These arrangements may have to be approved by the Revenue, which deters funds from this approach. In your case, the commutation rate means you may lose in cash terms. But this must be balanced by the convenience of taking a tax-free lump sum and early retirement means you have a call on the assets of the scheme ahead of those still in work. This could be important if the scheme is not as well-funded as you believe. Ultimately, it is likely to be up to trustee discretion.

You should consult a financial adviser with a pensions qualification.

Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Recruitment Genius: Compliance Manager

    £40000 - £60000 per annum: Recruitment Genius: A Compliance Manager is require...

    SThree: Talent Acquisition Consultant

    £22500 - £27000 per annum + OTE £45K: SThree: Since our inception in 1986, STh...

    Recruitment Genius: Experienced Financial Advisers and Paraplanners

    Negotiable: Recruitment Genius: This extremely successful and well-established...

    Guru Careers: FX Trader / Risk Manager

    Competitive with monthly bonus: Guru Careers: We are seeking an experienced FX...

    Day In a Page

    How to stop an asteroid hitting Earth: Would people co-operate to face down a global peril?

    How to stop an asteroid hitting Earth

    Would people cooperate to face a global peril?
    Just one day to find €1.6bn: Greece edges nearer euro exit

    One day to find €1.6bn

    Greece is edging inexorably towards an exit from the euro
    New 'Iron Man' augmented reality technology could help surgeons and firefighters, say scientists

    'Iron Man' augmented reality technology could become reality

    Holographic projections would provide extra information on objects in a person's visual field in real time
    Sugary drinks 'are killing 184,000 adults around the world every year'

    Sugary drinks are killing 184,000 adults around the world every year

    The drinks that should be eliminated from people's diets
    Pride of Place: Historians map out untold LGBT histories of locations throughout UK

    Historians map out untold LGBT histories

    Public are being asked to help improve the map
    Lionel, Patti, Burt and The Who rock Glasto

    Lionel, Patti, Burt and The Who rock Glasto

    This was the year of 24-carat Golden Oldies
    Paris Fashion Week

    Paris Fashion Week

    Thom Browne's scarecrows offer a rare beacon in commercial offerings
    A year of the caliphate:

    Isis, a year of the caliphate

    Who can defeat the so-called 'Islamic State' – and how?
    Marks and Spencer: Can a new team of designers put the spark back into the high-street brand?

    Marks and Spencer

    Can a new team of designers put the spark back into the high-street brand?
    'We haven't invaded France': Italy's Prime Minister 'reclaims' Europe's highest peak

    'We haven't invaded France'

    Italy's Prime Minister 'reclaims' Europe's highest peak
    Isis in Kobani: Why we ignore the worst of the massacres

    Why do we ignore the worst of the massacres?

    The West’s determination not to offend its Sunni allies helps Isis and puts us all at risk, says Patrick Cockburn
    7/7 bombings 10 years on: Four emergency workers who saved lives recall the shocking day that 52 people were killed

    Remembering 7/7 ten years on

    Four emergency workers recall their memories of that day – and reveal how it's affected them ever since
    Humans: Are the scientists developing robots in danger of replicating the hit Channel 4 drama?

    They’re here to help

    We want robots to do our drudge work, and to look enough like us for comfort. But are the scientists developing artificial intelligence in danger of replicating the TV drama Humans?
    Time to lay these myths about the Deep South to rest

    Time to lay these myths about the Deep South to rest

    'Heritage' is a loaded word in the Dixie, but the Charleston killings show how dangerous it is to cling to a deadly past, says Rupert Cornwell
    What exactly does 'one' mean? Court of Appeal passes judgement on thorny mathematical issue

    What exactly does 'one' mean?

    Court of Appeal passes judgement on thorny mathematical issue