Consumer rights: What to do with a house-sale windfall
To save the cash or pay off the mortgage is the £147,000 question... Does court offer hope for scammed consumer... How to get help when debts close in
Sunday 25 October 2009
We have £147,000 equity from the sale of a flat. We currently have a variable rate (2.5 per cent) mortgage with Intelligent Finance for £240,000. We intend to buy another property in about nine to 12 months. In the meantime, are we better to pay off some of our mortgage or to invest money in a bank account?
Independent Financial Adviser Simon Hodge says, "The downside of paying off part of your mortgage is the question of being able to release your capital again when you're ready to buy. Banks aren't overly keen to do that at the moment. The savings account option would be more flexible and allow you to have money available quickly if you need it or for a large deposit to make the borrowing easier and generally on better terms." You can check out the best-buy savings accounts through websites such as moneysupermarket.com or moneyfacts.co.uk. Remember, you can pay up to £3,600 (£5,100 if you're over 50) into a cash individual savings account in this tax year and interest will be paid free of tax as a result.
Mr Hodge also suggests "offsetting" your capital against your mortgage rather than paying it off. Your savings are held in your account beside the mortgage and the interest paid on them pays interest on the loan. Check that your Intelligent Finance product will allow you to "offset" your equity against your mortgage. That would, in effect, save you the interest payments on £147,000 of your mortgage. If you kept making your existing monthly repayments, this would reduce your existing mortgage and you'd still have the capital available for when you're ready to buy your new property. The interest rates at the moment are relatively low and the 2.5 per cent you're paying is reasonable. If you can't use offset, there are some accounts which will pay up to 3 per cent AER which is approximately comparable to the interest you're paying on your mortgage so, in effect, will be "interest neutral" by the end of the term.
In the 2 August issue you advised me when I'd had about £20,000 taken from my bank account through an email phishing fraud. After a lot of correspondence with the bank – NatWest – the case went to the Ombudsman who decided that I was partly to blame because I'd responded to a request for my personal details and password and I should have known not to do this. The bank paid me a small amount of money back and I eventually had to accept that. Now I've read in the newspapers that I wasn't the only victim. Another 138 people were caught out using the same bank's website and some individuals are currently being prosecuted. Does this change things? Can I make another claim from the bank?
Name and address withheld
I remember being frustrated about your case but unfortunately this latest development changes nothing as far as you are concerned. The court proceedings don't in any way affect the liability of NatWest. The proceedings are against the alleged fraudsters, not legal proceedings against the bank. In addition, your acceptance of the Ombudsman's award did entail signing a "full and final settlement" clause which made it legally binding on you, so nothing has changed as far as NatWest's liability is concerned. Even if the defendants are found guilty, this wouldn't affect the liability of the bank. You could lodge a claim against anyone found guilty of the phishing fraud.
However, John Eaton, the financial services director at Leeds solicitors Lupton Fawcett, thinks this will be a difficult course of action. "The problem is that, although you would have a pretty solid case in law if you could prove you had been a victim, that doesn't mean that you could recover the money which had been stolen from your account. If you did feel you wanted to give this avenue a try, the Southwark Crown Court prosecution department might be able to confirm the defendants' financial situations – but it's a pretty long shot. Before you try to extract blood from a stone, you need to know that the stone does have some blood in it."
I'm a few months behind with my mortgage and can't see how things are going to improve. There's no overtime at the minute and I depended on that to pay the mortgage, so the situation is likely to get worse rather than better. I work the usual office hours so I can't get away to talk to anyone and I don't want to alert the building society to my situation. Can you help?
You must talk to someone or the situation will certainly get worse. Your lender will already be aware that you are in arrears and lenders tend to get more difficult if they don't know why. They will do all they can to help if they know the score. If you'd rather talk to an adviser first, make an appointment in your lunch hour. Some Citizens Advice Bureaux have extended opening hours so they can see people who otherwise can't get to them and there are telephone-based debt advice services. National Debtline has just taken on almost 50 more advisers and is open on Saturday mornings. They can guide you through your debt problems or give you all the information you need to sort them out yourself. Call them on 0808 808 4000 or go to www.nationaldebtline.co.uk. CCCS has a free phone service on 0800 138 1111 or www.cccs.co.uk
All three organisations are charities and advice is free. The Building Societies Association has just published a report showing that the sooner people contact them the more likely it is things will get sorted out.
Do you need a financial makeover?
Write to Julian Knight at The Independent on Sunday, 2 Derry Street, London W8 5HF; firstname.lastname@example.org
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