Questions of Cash: September 2015

Q. Our bank no longer offers bridging loans, so to finance a house move we signed a mortgage application for a loan of £50,000 secured on a buy-to-let property we own, with interest only payments over five years.  We intend to redeem it after two years – there is no penalty for early redemption.  We only wanted £40,000 over six to nine months, but we couldn’t arrange that.  When we read the small print we started to worry – the mortgage is not regulated by the Financial Conduct Authority (FCA).  There is a 14 days cooling-off period, so we can pull out of it – though we have paid a £500 valuation fee.  RH, Norfolk.

A. Buy-to-let mortgages are not regulated by the FCA, explains Ray Boulger, senior technical manager with John Charcol brokers, which means that in the event of a complaint there is no automatic right of recourse to the Financial Ombudsman Service.  He adds: “A buy-to-let mortgage will certainly have been cheaper than a bridging loan and so the advice to have a BTL mortgage was very sensible. However, it is less clear whether the actual mortgage product was good advice.  Without full details of your reader’s personal situation and details of the property I can’t be sure about this.  The reason I am concerned is your reader’s comment that they only wanted £40,000 and only wanted it for a maximum of nine months, which suggests that a different lender would have been more suitable.  Several lenders offer BTL mortgages with no early repayment charges and selecting one of these would have avoided tying your reader in for two years.  Because your reader only wants to borrow a small amount for a short term the key requirements in selecting the best mortgage, after ignoring lenders whose minimum loan size is more than £40,000, should be: low set-up costs, a low arrangement fee and preferably a free valuation and free legal fee; no early repayment charges, allowing complete flexibility on when the mortgage is repaid; a good interest rate.”  But given the stage you are at with your purchase and the fact that you have now paid the valuation fee, Mr Boulger suggests you proceed with the mortgage.

Q. In September 2014 I took out a one year Sky Broadband package, including line rental, costing £16.40 per month. In June this year we moved flats within the same terraced house, moving one floor upstairs. When I contacted Sky I was told it could not provide in the upstairs flat the services I currently had as the ‘exchange was full’.  I would instead have to pay a higher cost, or cancel my services.  I was given 24 hours to decide. The next day an operator agreed to cancel my services free of charge, refunding me for half the month during which it could not supply the services I had paid for.  But on 13 July, Sky took another £16.40 from my bank account. When I then phoned I was told £17.49, plus the refund, would be credited to my account within three to five working days.  The money has still not been refunded, despite my further phone calls.  HC.

A. Sky apologises for what it calls the “confusion” about the timing of the repayment, which has now been made.

A. My daughter has had a car written-off and junked and had to pay much higher insurance costs – all because she lost the keys. The car was her partner’s: an old but very reliable Mazda 323.  She was a named driver.  They had previously bought a spare key, but unfortunately did not have its chip programmed. When the original key was lost, a much more extensive re-programming of car and key was needed. My daughter approached their insurer Covea to see if it would cover the expense. This request went via the broker, the AA. Covea agreed to cover the cost and sent round a truck to collect the car for the key to be programmed. My daughter heard nothing for days.  When she enquired if the car was ready she was informed it was a write-off because reprogramming would cost more than the value of the car. Her partner would be entitled to a sum equal to its valuation less deductions of about £150. They asked to have the car back so a local garage could disable the anti-theft system, making their spare key usable. Covea replied that it was now written-off, uninsured and illegal to be driven. The AA got Covea to pay £600 and release the car, but it was a mess after being left outside for weeks with a window open.  Covea loaned a courtesy car and my daughter bought a car, approaching Covea to insure it, which quoted a very high premium. Other insurers offered much lower premiums.  GT, Derbyshire.

A. Covea says the market value of the vehicle was £425, which was less than the cost of the reprogramming, so the car was deemed a write-off. “Our customer was informed and offered a market value payment instead of repair, but declined the offer and asked for the vehicle to be returned. During this process mistakes were made for which we apologised and by way of recompense, we increased the settlement valuation to £600, waived the excess of £300 and provided a courtesy car to minimise inconvenience. [The reader’s daughter] and her partner accepted this resolution.”  Covea says premiums are quoted on the basis of a variety of factors, using automated electronic systems, which means that premium quotes vary considerably.  It suggests that your daughter’s quote was likely to be much higher than that of her partner because his premium benefited from a no claims bonus.  It adds: “The way all risk factors and rating criteria, including no claims bonus, are evaluated varies between different insurers.  Although this can be confusing and frustrating, it does create competition in the market, which gives customers choice and enables them to shop around for the best price for their individual circumstances.”

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