P564 ORACLE 564 Mon12 Oct C4 1741:34 # Beware the homeloan  that grows on you...  The annual review of repaylents has obvious advantages. Not only do you know what you will pay, but the lender doesn't have to alter thousands of accounts at every rate change. The disadvantage comes if you repay in full within the first year or two of a new loan when most of what you pay is purely interest - in a per—od of rising rates you may not have paid enough. This makes the loan 'grow', so you end up owing more than you borrowed at the end of thf xfar. Normally, repayment adjustments mean you pay it in the next year - but repay the loan early and you'll have an unexpected bill. more > Your Money ...560 Tax Rates ...565 Your Tax You Write Feature City
P564 ORACLE 564 Mon12 Oct C4 1753:05  2/6 # Beware the homeloan  that grows on you...  The annual review of repayments has obvious advantages. Not only do you know what you will pay, but the lender doesn't have to alter thousands of accounts at every rate change. The disadvantage comes if you repay in full within the first year or two of a new loan when most of what you pay is purely interest - in a period of rising rates you may not have paid enough. This makes the loan 'grow', so you end up owing more than you borrowed at the end of the year. Normally, repayment adjustments mean you pay it in the next year - but repay the loan early and you'll have an unexpected bill. more > Your Money ...560 Tax Rates ...565 Your Tax You Write Feature City
P564 ORACLE 564 Mon12 Oct C4 1741:14  3/6 # Beware the homeloan  that grows on you...  An example of this 'growing' homeloan comes from a reader who took out a repayment mortgage with the Midland in the summer of 0886 for £48,500. He decided this summdr to move house, staying with the Midland as the lender. The Midland, which operates the annual review system, said he would have to repay his old mortgage and take out a new one on the new house. The shock came with the bill - the Midland asked for £48,900, £400 more than the original loan! The bill could have been higher too, depending on the date it was repaid. more follows > Your Money ...560 Tax Rates ...565 Your Tax You Write Feature City
P564 ORACLE 564 Mon12 Oct C4 1750:10  4/6 # Beware the homeloan  that grows on you...  The reader had to pay back more than he borrowed because when he took out the loan, the rate was 11%. Since then, scweral rises have taken it to 12.5%. The net result is that he did not pay enough interest on the loan itself, hence the £400 unexpected bill - disturbing when moving ho5qf. Furthermore, had he repaid the loan a few days before the next repayment was due, he would have had to pay virtually all of that repayment too. So how could the reader, and other frequent movers, avoid this situation? more follows > Your Money ...560 Tax Rates ...565 Your Tax You Write Feature City
P564 ORACLE 564 Mon12 Oct C4 1740:14  1/6 # Beware the homeloan  that grows on you...  by Carol Oliver In recent years there has been a growing trend among lenders to offer homeloans in which repayments are reviewed and fixed annually. What you pay depends on two factors: what homeloan rates have done in the previous 12 months and what you need to pay in the next 12 months to ensure the loan will eventually be repaid within its set term (say, 25 years). It means that repayments are unchanged for 12 months, making budgeting easier. But what is an advantage for most can mean an unexpected bill for some. more> Your Money ...560 Tax Rates ...565 TSB UNIT TRUSTS UPDATED DAILY 529 Your Tax You Write Feature City
P564 ORACLE 564 Mon12 Oct C4 1751:12  5/6 # Beware the homeloan  which grows on you...  Some lenders who operate the annual review system, notably Barclays, offer you the chance to change your monthly repayments before the annual review. If this is an option, then take it in the first few years to avoid your loan 'growing' on you. After that it should be safe with an annual repayments review because enough capital will have been repaid to absorb rate changes. Even if you don't think you will move house in the first few years of a home- loan, it is worth doing if only as an insurance policy against a big extra bill should the unexpected happen (a job move to another area for instance). Your Money ...560 Tax Rates ...565 Your Tax You Write Feature City
P564 ORACLE 564 Mon12 Oct C4 1750:10  6/6 # Savings Certificates:  New for old?  If you are a taxpayer - particularly a highfr rate one - then National Savings Certificates offer a safe investment with guaranteed tax-free interest. The 33rd Issue's 7% is more than is currently offered by most banks and building societies for accounts below £1,000 (some offer more for £5,000 and above, but it's not guaranteed). One further consideration on whether you should trade in old for new now is that the 33rd Issue, as with any other issue, can be withdrawn and replaced with a lower rate issue in line with lower interest rates generally. The decision is yours! more follows > Your Money index 560 Holidays 580 Your Tax You Write Feature City
P564 ORACLE 564 Mon12 Oct C4 1730:40   Sa6ings Certificates:  New for old?  If you are a tax0—x—r - papticularly a hig(—r rate ofe then Nationad Qavings with guaranteed tax-dree interest. The 33rd qrte's 7% is more than is currentlh offered by most banks and "rjlding societies for accounts below £1,000 (some offer more for £5,000 and above, but it's not '— panteed). One further consideration on whether you should trade h& old for new fow is that the 33rd Issue, as with any other —ssue, can be withdrawn and replaced with a lower rate issue in line wit— lower interest ratds generally. The decision is yours! more follows > Xour Money index 560 Holi$—x0 580 Your Tax You Writd Feature Citx