16 The Sunday Times November 28, 2021
MONEY
FIVE THINGS
YOU NEED TO
KNOW ABOUT...
DEMUTUALISATION
THE
FIVER
5
5
5
1
Breaking up can be
hard to do, especially
when you’re a
company owned by your
members — known as a
mutual. Mutuals don’t
have shareholders. They
are owned by their
members and are
supposed to be run for
their benefit, not for profit.
Building societies are the
best example: savers
deposit their money so
the society can lend it out
to other members for
mortgages (think It’s A
Wonderful Life). Some
insurers are also owned
by their policyholders.2
Mutuals can
become ordinary
companies, making
a profit for shareholders,
through demutualisation.
A majority of members
have to vote for it and they
normally get shares or
cash payments in return.3
Building societies
were allowed to
demutualise in 1986
if more than 75 per cent of
members voted in favour.
The first was Abbey
National in 1989. Halifax
became a bank in 1997.
Aviva, Scottish Widows
and Standard Life are
among the insurers that
have demutualised.4
Demutualisation
can make it easier
to finance
expansion because
building societies and
insurers will no longer be
limited to raising money
from their members.5
The insurer LV has
been a mutual since
1843 but is the
subject of a proposed
£530 million takeover by
the US private equity firm
Bain Capital. The takeover
would give 270,000
policyholders £100 each.George NixonCREDIT CARDS
INTRODUCTORY RATES
Provider Card type Introductory purchase APR^1 Reward Contact
Tesco Bank Clubcard Purchases MC 0% for 23 months 20.9% Yes 0345 300 4278
Sainsbury’s BankDual Offer MC 0% for 22 months 20.9% Yes 0808 540 5060
Barclaycard Platinum All-rounder Visa 0% for 22 months 21.9% No 0800 151 0900BALANCE TRANSFERS
Provider Card type Introductory purchase Transfer fee^2 APR^1 Contact
Santander Everyday Long-term BT MC 0% for 31 months 2.75% (min £5) 20.9% 0800 912 3123
Sainsbury’s Bank Balance Transfer CC MC 0% for 30 months 1.50% (min £3) 19.9% 0808 540 5060
MBNA Long Balance Transfer MC 0% for 30 months 2.95% (no min)21.9% 0345 606 2062CASHBACK CARDSProvider Card type APR^1 Cashback Contact
American ExpressPlatinum Cashback 29.8% 0.75%-1.25%. Intro 5% for 3 months 0800 917 8047
American ExpressPlatinum Cashback Everyday24.5% 0.5%-1%. Intro 5% for 3 months 0800 917 8047
Santander All in One Mastercard 23.7% 0.5% 0800 912 3123
1 APR = annual percentage rate, dependent on credit rating.^2 Fee charged on the amount of each balance transfer during the introductory period.
Source: moneyfacts.co.ukCASH ISAS
INSTANT ACCESS
Provider Account name Min deposit Interest Transfers in Contact
Shawbrook Bank Easy Access Isa Issue 18 £1,000 0.67% Yes shawbrook.co.uk
Cynergy Bank Online Isa ( Issue 17) £1 0.65% Yes cynergybank.co.uk
FIXED RATE
Provider Account name Term Min deposit Rate Transfers inContact
Castle Trust Bank 1 Year Fixed Rate e-Cash Isa1 year £1,000 0.96% Yes castletrust.co.uk
Secure Trust Bank 2 Year Fixed Rate Cash Isa2 years £1,000 1.2% Yes securetrustbank.comSource: savingschampion.co.uk — 0808 178 5354CHILDREN’S ACCOUNTS
Provider Account name Account type Min deposit Interest rateContact
Dudley BS Junior Easy Saver Regular Saver £10 3.5% dudleybuildingsociety.co.uk
Santander^1 123 Mini Current Account Current Account £1,500 2.96% santander.co.uk
HSBC^2 MySavings Easy Access £10 2.47% hsbc.co.uk(^1) Interest paid on balances between £1,500 and £2,000 (^2) 0.25% paid on balances above £3,000
JUNIOR ISAS
Provider Account name Min deposit Interest rate Rate Contact
Loughborough BSJunior Isa £1 2.5% Variable theloughborough.co.uk
The Family BS Cash Junior Isa £3,000 2.4% Variable familybuildingsociety.co.uk
Coventry BS Junior Cash Isa (2) £1 2.25% Variable coventrybuildingsociety.co.uk
Source: savingschampion.co.uk — 0808 178 5354
Best Buys
FOREIGN
CURRENCY
Interbank rates at 5pm
on Friday, which show
where the market is
trading. They are not
indicative of the rate
you could get.
EURO
GBP>EUR
1.17
USA
GBP>USD
1.33
SWITZERLAND
GBP>CHF
1.23
AUSTRALIA
GBP>AUD
1.87
ENERGY DEALS
Table shows the cheapest tariff from the three
cheapest suppliers. Excludes fixed tariffs of
less than 12 months’ duration, tariffs that
do not have national coverage and tariffs
where payments are taken in advance of
the customer coming on supply.
Supplier Average annual bill Rate Contact
British Gas £1,277 Variable 0333 202 9816
EDF Energy £1,277 Variable 0333 405 5555
OVO £1,277 Variable 0330 303 5063
Phone numbers provided will call through to theenergyshop.com switch support team. Source: theenergyshop.com — 0800 448 0205
SAVINGS ACCOUNTS
INSTANT ACCESS
Provider Account name Min deposit Interest rate Contact
Aldermore Double Access Account Issue 1 £1,000 0.75% aldermore.co.uk
Cynergy Bank Online Easy Access Account Issue 43 £1 0.70% cynergybank.co.uk
Shawbrook Bank Easy Access Account Issue 28 £1,000 0.67% shawbrook.co.uk
NOTICE ACCOUNTS
Provider Account name Notice period Min deposit Interest rate Contact
Secure Trust Bank 120 Day Notice Account (11 Nov 2021)120 days £1,000 1.1% securetrustbank.com
Shawbrook Bank 120 Day Notice Personal Account Issue 50120 days £1,000 1.08% shawbrook.co.uk
Close Brothers Savings 95 Day Notice Account (Issue 11) 95 days £10,000 1.05% closesavings.co.uk
FIXED-RATE BONDS
Provider Account name Term Min deposit Interest rate Contact
Investec Fixed Rate Saver 1 year £5,000 1.36% savings.investec.com
Zopa 2 Year Fixed Term Savings 2 years £1,000 1.61% zopa.com
Smartsave 3 Year Fixed Rate Saver 3 years £10,000 1.83% smartsavebank.co.uk
DEALS ARE LISTED ONLY IF THEY ARE COVERED BY THE UK FINANCIAL SERVICES COMPENSATION SCHEME (FSCS) OR A EUROPEAN EQUIVALENT
Source: savingschampion.co.uk — 0808 178 5354
MORTGAGES
2-YEAR FIXED RATES
Lender Rate Scheme Deposit Fee Notes Contact
First Direct 1.24% Fixed for 2 years 40% £490 LV 0800 482 448
Furness BS 1.3% Fixed for 2 years 20% £999 LOV 0800 220 568
Leeds BS 2.07% Fixed to 29.02.24 10% £0 LV 0345 045 4049
3-YEAR FIXED RATES
Lender Rate Scheme Deposit Fee Notes Contact
HSBC 1.34% Fixed to 31.01.25 40% £999 RS 0800 494 999
Nationwide 1.39% Fixed for 3 years 15% £999 FPV 0800 302 010
Nationwide 1.74% Fixed for 3 years 10% £999 PV 0800 302 010
LONG-TERM FIXED RATES
Lender Rate Scheme Deposit Fee Notes Contact
Santander 1.34% Fixed to 02.03.27 40% £999 LV 0800 068 6064
Monmouthshire BS 1.79% Fixed for 5 years 20% £999 FLV 0800 302 010
Leeds BS 2.42% Fixed to 28.02.27 10% £999 LV 0345 045 4049
Virgin 1.95% Fixed to 01.04.32 35% £995 MR 0345 605 0500
TRACKERS / DISCOUNTS
Lender Rate Scheme Deposit Fee Notes Contact
Barclays 0.85% Tracker + 0.75% for 2 years 40% £999 ELV 0333 202 7580
Nationwide 1.34% Tracker + 1.24% for 2 years 10% £999 EPV 0800 302 010
Newbury BS 1.69% 2.26% discount for 5 years 25% £850 LV 01633 555 5777
First Direct 2.19% Tracker+2.09% for term 25% £490 ELV 0800 482 448
FIRST-TIME BUYER / LOW DEPOSIT
Lender Rate Scheme Deposit Fee Notes Contact
Leeds BS 2.44% Fixed to 29.02.24 5% £995 PV 0345 045 4049
TSB 2.94% Fixed to 28.02.27 5% £995 OPV 0800 056 1088
Nationwide 1.55% Fixed for 5 years 25% £999 FHPV 0800 302 010
BUY TO LET
Lender Rate Scheme Deposit Fee Notes Contact
Skipton BS 1.44% Tracker + 1.34% for 2 years 40% £995 ELV 0345 850 1755
Leek United BS 1.59% Fixed to 31.01.24 25% £995 V 0808 169 6680
Virgin 1.65% Fixed to 01.04.27 40% £995 CR 0345 605 0500
Early repayment charge applies unless otherwise stated. Most deals track Bank of England base rate.
C = £500 cashback for purchases; E = No early repayment charge; F = £500 cashback for first-time buyers; H = Help to Buy;
L = Free legal work for remortgages; M = £300 cashback for purchases; N = £250 cash back for purchases; O = £250 cash back;
P = Purchases only; R - Free legal work and valuation for remortgages; S = Remortgage only; V = Free valuation
Source: landc.co.uk — 0800 373 300
CURRENT ACCOUNTS
CREDIT INTEREST
Provider Account name Account fee Reward Balance (for reward) Contact
Halifax Reward Current Account None £5 a month – 0345 720 3040
TSB Spend & Save None £5 a month – 0345 975 8758
Virgin Money M Plus Account None 2.02% AER Up to £1,000 0800 678 3654
OVERDRAFTS
Provider Account name Account fee Interest rate^1 0% overdraft limit Contact
Starling Bank Current Account None 15% £0 starlingbank.com
First Direct 1st Account None 39.9% £250 0345 600 2424
Virgin Money M Plus Account None 19.9% £0 0800 678 3654
(^1) Equivalent annual rate.
- Based on overdraft of £500 for 7 days a month.
Some accounts require minimum funding/direct debits to open or receive rates shown.
Source: moneyfacts.co.uk
Demand for mortgages for older
people is high, but expect to pay
over the odds, says Kate Palmer
After 60 years, I have finally
given up on National Savings
could see them on the screen.
Dear God! I was screaming by
then. They logged me out, for
bad language presumably, so
I opened another bottle and
gave up for the day. Next day,
same stupid palaver.
For security reasons, they
then asked me my father’s
mother’s name. You what? I
put in her maiden name.
Wrong. Then I put in her
married name. And this was
wrong as well. How could it
be? So they blocked my
password, totally cutting me
off from my own money.
I eventually found out how
to reset it, but was told you
can’t do it online — you have
to ring up. When I did get a
human to speak to me, he
was working from home and
his computer was down. He
suggested I try another time.
The next day another NS&I
person told me my password
had been cancelled, but not
to worry, they were posting a
new one. How long would
this take? Five days, I was
told. Bloody hell. 100 years
ago if you posted a letter in
London at breakfast it arrived
at lunchtime. Then the reply
would come back by tea time.
I am off next week to the
Isle of Wight. The password
will lie in an empty house.
The deadline for the deposit
will have gone. It’s all their
fault. I now hate NS&I. That’s
it. After 60 years, I’m cashing
in every certificate when it
matures. The cash will go to
charity or under the bed.
Davies has given his advance
for The Heath: My Year on
Hampstead Heath to the Heath
and Hamptead Society. It is
published by Head of Zeus, £25
Then last year I bought a
cottage in Ryde on the Isle of
Wight. Each time, I had to dig
out my holder’s number and
understand all the cashing in
options. But I managed it.
Only took about ten minutes.
It so happens that recently
I have been helping one of my
family to buy a flat. When
they said they needed the
deposit urgently I replied:
“No problem, I will have it in
my bank in 24 hours, then
whizz it into your bank! You
can’t beat good old NS&I.”
A whole week has gone by
and I don’t think I have been
so furious, annoyed and
confused by anything for
decades. At first I blamed
myself, getting dopey in my
old age. But I am the sharpest
85-year-old in this house. OK,
I live on my own, but still.
I am now convinced that
it’s NS&I that is collapsing,
can’t cope, total shambles.
Just like HMRC and the banks.
I did eventually access all
my certs and cashed some in,
which took about three days
— then they started claiming I
had not given them my bank
details. Which was potty. I
I
have gone through my life,
at least my financial life,
boasting how prudent,
sensible and wise I have
been, trusting all my
savings to good old National
Savings certificates. You can’t
beat them, I always said — so
safe, so simple. OK, so you
don’t make a lot of money
and interest rates are awful,
but you can cash them in any
time you like in a few minutes
and you will have no tax or
paperwork to worry about.
Isn’t that fab? Isn’t that easy?
From the moment my wife
and I had any money, back
in the 1960s, I put the
maximum in every new issue,
in my name and in hers.
Clever old me. I inherited her
lot when she died five years
ago, which means that if I
print out what I own, there
are enough pages to
wallpaper a room.
Over the decades, when
a certificate has matured I
have almost always let it be
automatically invested for the
next five years, regardless of
the rubbish new rates.
My thinking has always
been that when I got old and
had no work, I would live on
those Nat savings, cashing in
enough each month to keep
me in essentials such as
Beaujolais. There would be
no tax to pay, so I would be
able to get shot of my
accountant. Hurrah. Life
would have been so simple.
I never imagined, though,
that I would still be in work at
this age, which means I still
need an accountant. Curses.
My savings certs have
steadly increased in value —
modestly and today,
imperceptibly. The money
just lies there. When I pop my
clogs, there will doubtless be
40 per cent inheritance tax. I
wonder if I will get a
posthumous knighthood for
services to the Treasury.
Over the decades, I have
very occasionally cashed
some in, such as back in 1987
when we bought a Lakeland
home in Loweswater, which I
sold when my wife died.
Terrible returns and
impossible customer
service have driven
Hunter Davies away
from the NS&I bank
fixed rate — with Tipton and
Coseley Building Society. Her
broker said she was too old
for an ordinary mortgage, so
she went for a retirement
interest-only deal, also
known as a Rio.
Frankish gets more than
£1,000 a month from her
state pension and a defined
benefit pension from a
former employer. Her son
and daughter are grown up,
she has no significant
outgoings and keeps healthy
through hiking.
“I’m a fit 70-year-old and
I’ve got a decade ahead of me
to travel and do things, so
having a mortgage suits me
as I need my cash now,” she
said. “I read about record-low
mortgage rates, but they all
seem to be for high-earning
young people, even though
I have a guaranteed income
while a 30-year-old might lose
their job at any point.”
Rio deals came to the
market in 2018 as a solution
to a lack of traditional
mortgages for older
borrowers.
They are similar to normal
interest-only loans, but their
rates are higher at an average
of 3.61 per cent compared
with the average two-year
fixed rate of 2.29 per cent.
There are 119 Rio products
offered by 21 lenders,
according to the data firm
Moneyfacts — up from 74 in
February last year.
Most lenders offer Rios to
anyone aged 55 or over and
allow overpayments of up
to 10 per cent a year. The
maximum loan you can
take out is generally 50 to
70 per cent of the value
‘I
f I was 30, and not 70,
I’d be able to get a much
cheaper mortgage —
how is that fair?” asked
Dee Frankish, a retired
university student manager
from Stone in Staffordshire.
The industry’s response is
likely to be that mortgage
prices are based on risk. The
lowest rates go to the safest
borrowers who are least likely
to default, typically those
with high salaries and a large
amount of equity in their
homes.
The highest rates go to
riskier borrowers who may
have lower salaries, smaller
deposits or less time to repay
because they are older.
Lenders are more reluctant
to give you a loan if you are
in your sixties or seventies
because they have limits on
how old you can be while still
repaying a mortgage.
Frankish took out a
£51,000 loan in 2019 (15 per
Think that
first-time
buyer rates
are bad?
Try being 70
of your home and most
people plan to repay the
balance when they sell.
Barclays said the terms of
most of its non-Rio mortgages
will not go beyond the age
of 70 or retirement age,
whichever comes first.
Halifax increased its upper
limit to 80 last year. A 70-
year-old could in theory take
out a ten-year mortgage.
Because there is more risk
of being caught in negative
equity if you are not paying
off any of the loan balance,
interest-only mortgages are
usually available only to
higher earners.
Some lenders offer a
combination of interest-only
and repayment mortgages.
The cheapest rate at 60 per
cent loan-to-value (LTV) is
0.99 per cent from Halifax
with a £999 fee.
A more common option for
older borrowers is equity
release. You borrow against
the value of your house but
do not pay any interest.
Instead it is accrued each
month and added to the
balance. This has
implications for the amount
your descendants will inherit.
Mortgage brokers need
special training to advise on
equity release mortgages,
which come with a no
negative equity guarantee
these days, meaning your
estate will never owe more
than the property is worth
when it is sold.
“Demand for later-life
lending is only going to
increase,” said Nicholas
Morrey from the mortgage
broker Coreco. “A lot of
people won’t want to
downsize and the
government hasn’t made
many incentives for them to
do that.”
He said Rios are still very
expensive, usually because
lenders have to anticipate a
situation where they need to
recover a property, which
involves extra time and costs.
My money
can rot
under the
bed instead
cent of the value of her
£340,000 converted barn)
so that she could replace
her car and refurbish her
bathroom. She was divorced
16 years ago and has very
little in savings.
She pays £155 a month at
a rate of 3.65 per cent —
nearly triple the cheapest
February last year.
Most lenders offer Rios to
anyone aged 55 or over and
allow overpayments of up
to 10 per cent a year. The
maximum loan you can
take out is generally 50 to
70 per cent of the value
Hunter Davies spends his savings certs on beaujolais