READERS' LIVES : No more home, but the lender's still knocking

Mortgage repayment demands ... bond closing dates ... PEP charges. Your financial queries answered
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I am being pursued for pounds 30,000 by my former mortgage lender, following the repossession of my house. But I believe the lender received pounds 15,000 under a mortgage indemnity policy. The lender is pursuing me because my former joint purchaser, although equally liable, earns very little. But I have no money and, I feel, no future. I am making myself ill with worry.

WP, London

Yours is a distressing story but one, alas, which may become even more common over the next few years as lenders seek to recoup outstanding debts acquired in the depths of the housing market recession. There has been controversy over whether a borrower can be held liable for money a lender has claimed under a mortgage indemnity policy. A borrower lost in one test case last year. But you have a debt which exceeds the level of the mortgage indemnity guarantee.

Your best course of action is to consult a specialist debt counsellor. They have the experience to negotiate on your behalf and should know how far a mortgage lender might be prepared to take the case. You may be advised to offer a (modest) sum in full and final settlement - even though you might need to take out a personal loan to fund this. The Citizens' Advice Bureau should be able to put you in touch with an adviser. Or you can ring National Debtline on 0121 3598501.

Your savings rates guide on 26 January featured a two-year bond from Nationwide Building Society, offering a good fixed rate. But our local branch told us that the bond had been withdrawn several days before your paper was printed! Could the author please verify the state of investment opportunities and, if possible, give closing dates?

RS, Cheshire

First, apologies for the inconvenience. It would, however, be difficult to improve on our service for savings and borrowings rates. Details are supplied by MoneyFacts, which checks details on the Thursday before publication and asks banks and building societies whether they will hold good over the weekend.

The Nationwide bond that caught your eye offered a fixed rate of 7.25 per cent for two years. It was issued on 15 January and withdrawn on 24 January. It is quite possible that Nationwide did not know on the Thursday that the bond would be withdrawn the next day.

This particular bond is typical of many fixed-rate bonds where a bank or building society wants to attract a limited amount of money from depositors at an attractive fixed rate. Once the target has been reached, the bond is closed. If you see a good fixed rate you need to move fast. Our tables give telephone numbers, and many banks and societies have free numbers.

Finally, if you have access to a fax and want up-to-the-minute best savings rates, pick up the handset and dial 0336 400238.

I am constantly advised to use my PEP allowance. But however I do my calculations, the charges exceed or nearly exceed any tax savings. Am I correct in thinking that unless one is a higher-rate taxpayer and likely to pay capital gains tax, PEP charges will cancel out any tax saving?

RJ, Berkshire

You are both right and wrong. For those who pay basic-rate tax and are unlikely to incur a capital gains tax bill, a key factor in deciding the pros and cons of Pepping an investment is whether there are any charges. Many unit trust PEPs have no extra charges. You pay no more than the initial and annual charges you would pay if you were to buy the unit trust without the tax-free wrapper of a PEP. In a few cases, the Pepped version of a unit trust may be cheaper.

But when you come across extra PEP charges you need to be cautious. Basic-rate taxpayers have to check the numbers even more carefully now the basic rate tax on investment income is down to 20 per cent - equivalent to just one fifth of the gross dividend from shares.

Remember to add on VAT. For example, take an annual charge of 1 per cent. With VAT this becomes 1.175 per cent: multiply by 5 to get 5.875 per cent. If you are a standard-rate taxpayer your dividends must be worth 5.875 per cent of the value of your investments for the tax saving to pay for the annual charge.

You say you have a broad spread of savings. Direct shareholdings may be worth Pepping if the company sponsors a low-cost PEP. But bear in mind that you will incur costs in selling your holding and buying it back through a PEP. The Chase de Vere PEP Guide (pounds 12.95) lists details of providers and charges. Ring 0800 526091 for details.

q Write to Steve Lodge, personal finance editor, Independent on Sunday, 1 Canada Square, Canary Wharf, London E14 5DL, and include a telephone number.

Do not enclose SAEs or any documents that you wish to be returned. We cannot give personal replies or guarantee to answer every letter we receive. We accept no legal responsibility for advice.

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