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Together loan sees huge hike

Borrowers holding Northern Rock Together products who remortgage away from the lender could see rates more than double on the unsecured portion of the controversial product.

An unnamed broker says that when remortgaging a Together client he discovered they would be transferred by NR onto an APR of 16.8% when the deal’s unsecured loan element was detached from the mortgage.

The broker says he and the client are reviewing the offer because the terms of detachment were not made clear in the Key Facts Illustration. The client now faces repayment difficulties.

He says: “By moving the unsecured portion of the loan onto this APR, NR is effectively locking him into a high rate.”

An NR spokesman says: “Detachment terms will vary according to the original deal but may involve customers moving onto our SVR, currently at 7.49%, or just below that rate for the remainder of the term.

“In most cases the unsecured loan interest rate reverts to 8% plus SVR when borrowers remortgage away from NR.”

He adds: “It is also worth pointing out that the terms of the unsecured loan element and the interest rate it will move onto if decoupled from the mortgage are stated from the outset in the KFI.”

Caroline Davey, deputy director for policy and research at Shelter, says: “It is vital that mortgage providers lend responsibly and carefully assess whether customers will be able to keep up with loan repayments in the long term.”


FOS to name and shame

The Financial Ombudsman Service is to name and shame companies that it receives the most complaints about.

Equity release thriving in crunch

The housing market is slowing and new mortgage volumes are falling – it’s a story we are familiar with, but the equity release market is thriving. Safe Home Income Plan’s Q2 figures, which came out this week, demonstrate how equity release is resisting the credit crunch with a 14% increase in business – an encouraging scenario considering the current economic climate.

Lloyds’ New Baby

Although there’s still no official name for the new mega-lender formed by the takeover of HBOS by Lloyds TSB, cyber squatters have been quick to see an opportunity.

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England vs Australia: pensions

Well, the cricket season is here, and England and Australia are stepping up to the wicket. Although we compete with each other in the sporting world, when it comes to pensions, Australia’s pension programme is held up as a model for our auto-enrolment initiative. Auto-enrolment was introduced because people weren’t saving enough into their pensions, and it is still early days but signs are positive. However, in Australia, saving into a pension is compulsory, and in fact employers are the ones who have to pay in. Employees in Australia can make additional contributions into their pensions, but they don’t have to. Should the onus be on the employer or employee to save? Well in the UK we think it’s both, but to get ‘adequate’ savings for retirement it’s the employee who has to pay more in.


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