Here we round up the most thought-provoking or unmissable reader comments posted after stories and letters sent straight through to the editor.
Remember, we pick the best reader comment each week, so scroll down to the bottom to find out if your comment was our top pick last week.
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Mortgage Solutions | 05 Sep 2011 | 09:34
Simret Samra
Another decent idea but there’s still strings attached. Why can’t the big lenders bring out a widely available 100% LTV so the first-time buyers can truly kick-start the housing market?
Greg
05 Sep 2011 | 10:06
Is tying someone into 100% LTV with so much uncertainty over further house price falls really helping anyone? Are we that desperate to get on the housing ladder in this country?
Neil
05 Sep 2011 | 10:09
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PruProtect calls for protection to be compulsory
Mortgage Solutions | 06 Sep 2011 | 13:08
Cover
I heard a guy on the radio today complaining that his wife was having chemotherapy/radiotherapy and the government were too slow to shell out for the cost of additional childcare, as if the country owed him that. I immediately thought; why are you not apologising for failing to address your insurance needs in the past? I don’t think that it even crossed his mind about being partly responsible for looking after his family by insuring properly.
Stuart Duncan
07 Sep 2011 | 13:07
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Savers have lost £43bn interest since March 2008
Mortgage Solutions | 08 Sep 2011 | 10:02
IFAonline
Yes and don’t savers know it? Good to see that we’re subsidising the borrowers though. The amazing thing is that borrowers are not aware what the impact will be if/ or when interest rates rise. Their mentality appears to be to borrow as much as possible without any thought for the future which is what got us into this financial mess to start with. The government do not help the financial situation either by giving away taxpayers money.
Mark Davies
08 Sep 2011 | 10:41
The product referred to in the article is a Home Reversion Plan. A 100% Home Reversion Plan means 100% of the property has been sold – not 100% LTV. Using this example he sells the property for 48.23% of valuation in return for a rent free lifetime lease. The example of moving from a £180,000 to a £340,000 is perhaps an unlikely one. What about the older homeowner in a flat who is struggling with the stairs?
They could move from the £200,000 flat to the £250,000 bungalow with £50,000 being provided by equity release (either Lifetime Mortgage or Home Reversion Plan – both have their pros and cons and the client’s views on life expectancy and house price inflation are important).
DW
06 Sep 2011 | 11:48
I wondered if I had got all the facts right with this product. On the face of it, a Home Reversion appears a fairer option and the one I personally generally prefer. But all the charges have still not been accounted for, especially the commissions, fees legals and stamp duty, which are considerable.
So in effect you sell an asset worth £340k and receive back £164k – as you say 48.23% is hardly a bargain. And of the £164k he will probably lose about £15,000 to £16,000 with all the costs, leaving less than £150k net. Hardly good finance from where I come from. I freely admit that there may be circumstances, where notwithstanding the poor commercial proposition from the client’s standpoint, that these plans may fulfil a purpose.
Someone who is very ill and needs private treatment is another example, but these are in the realms of hyperbole and the example in the article, which I think serve to illustrate that these arrangements are marginal in the extreme and only to be used in the very last resort if you wish to avoid interesting interviews with the Ombudsman.
Harry Katz
06 Sep 2011 | 12:59
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SHIP needs a “strong, cleverly marketed message” – the industry wishlist
Mortgage Solutions | 01 Sep 2011 | 12:14
Simret Samra
There seems to be a pervading atmosphere of fear and mistrust created by those who believe that the homeowner is merely the custodian of their children’s inheritance, having no entitlement to personally tap into the huge equity reservoir built up over many decades. Far better to give it all away forsaking one’s own right to a comfortable and enjoyable time in later life.
Imagine if an investment opportunity arose, guaranteeing a fixed rate of annual growth on your capital, but with a catch that the fund manager alone decides when to return your money and profit. You would demand a decent return perhaps in the range of 6-8% per annum, in foregoing the ability to time encashment. This is exactly the risk and restriction that Lifetime Mortgage lenders face, together with business acquisition cost, yet sadly, a minority of advisers believe this to be a poor deal for the customer.
The disconnect between base rate or ordinary mortgage rate and Lifetime Mortgage fixed rates is perhaps not initially understood by clients, but any professional adviser worth his salt should be able to grasp this relatively simple economic fact and present it for the education of their client. Were the cards to be stacked entirely in favour of the provider as suggested, then we would surely see many more joining, not exiting the market.
Charges are far from “hidden”. Even the inexperienced adviser knows to read section 11 of the Keyfacts Illustration which lists in black and white the explicit charges; repeated again in the offer document.
Simon Chalk
06 Sep 2011 | 04:07
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CII warns of creeping FCA powers
Mortgage Solutions | 09 Sep 2011 | 08:22
IFAonline
I asked the FSA what IFAs fees are likely to be under the new FCA regime and they said that they don’t know. So, if the FSA/FCA doesn’t have a financial business plan, how on earth are IFAs supposed to have a business plan and be in a position to set our pricing menus?
Fiona
09 Sep 2011 | 11:18
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Santander chief’s blunder leaks banking reform delay
Mortgage Solutions | 08 Sep 2011 | 15:17
IFAonline
The reality is that even ring-fencing or a full separation of retail and ‘casino’ banking is still just tinkering with the current financial system. It might make the system marginally more safe, but it does nothing to address the fundamental problems. Until we realise that the crucial issue is money, who gets to create it and how they use it, then we’ll be missing the point.
Speculating about what minor impact various regulations will have isn’t going to change the fact that the underlying structure of banking is fundamentally unsafe. The only real, long-term solution is to reform the “money creation process” and implement clear, fair rules without special privileges for everybody, and then we will be able to calculate how the economy is going to be.
Mira
09 Sep 2011 | 10:28
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This week’s star letter comes from David Wright who tells us why equity release does not need to be overhauled.
“There have been questions in the industry press about whether equity release needs to be overhauled or rebranded. I think it does not and here is why. It’s no secret that equity release still carries a certain stigma. There are two main reasons for this. One is historic; the other is to confuse equity release with something else.
“In the 1980s, before any form of financial regulation, equity release was sometimes a hybrid of a mortgage to fund an investment.
“The investment will perform so well, you’ll have enough to pay the interest and a surplus to enjoy yourself,” the unregulated salesman would say.
A combination of rising interest rates, stock market falls and a crash in the housing market created a perfect storm. But these plans were outlawed and at least in part resulted in the formation of the equity release trade body SHIP.
To someone clinging onto problems from over 20 years ago I offer a motoring analogy.
“I remember an old Ford Corsair that didn’t have seatbelts, therefore I’m not buying a car!”
“But cars now have seatbelts, airbags and other safety features. They are safer than ever.”
Equity release has its own ‘seatbelts and airbags’.
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Thank you for all your comments and letters
From the Mortgage Solutions team
