Ask the experts - your questions answered - October 2006

If you are concerned you can always apply to see your rating through Experian or Eqifax over the internet for a small fee.

6. Desmond in Pyle, Wales, aks: I am taking early retirement at the end of August and what I will get off my employer and what I have now will amount too approximately �50000 and I would like to know how to invest this money for the best rewards

Amanda Davidson, Director of Baigrie Davies, independent financial advisers www.baigriedavies.co.uk answers:

The first consideration is whether you want to draw an income or not and whether the early retirement means that you will stop work altogether.

If you are continuing to be employed you can afford to set aside the capital for growth with a view to drawing the income in the future. If you need income then that is the priority.

Firstly make sure you have an emergency reserve so you don't have to interrupt investments if there is an emergency. Then consider a range of investments that include fixed interest, commercial property funds and equity funds.

You need to consider the risk you are prepared to take on investments but I would caution you not to be too cautious. People who retire early tend to live longer so this money may need to last 30 years or more.

Work out what income you need and hence the amount you may need to draw from the investments.

Make sure you take good independent financial advice with someone who will look after you and your investments on an ongoing basis.

However Anna Bowes, Investments Manager AWD Chase de Vere, Bath, Tel. 01225 368676 answers:

What you do with the money will depend on a number of issues such as;

How long are you looking to invest for?
Do you need access to the money?
Do you want it to provide income, capital growth or a mixture of the two?
Do you have any debt, including a mortgage?
How much risk are you prepared to take?

As you can see, your investment objectives and current circumstances will determine how you should invest the money and therefore you would be wise to seek some bespoke advice from an Independent Financial Adviser

7. John in Wolverhampton asks: If you set up a cash isa and pay in the max £3000 a year, do you set up a new isa each year to pay in £3000 or do you continue to pay into your initial isa set up?

This is with the view of having a mortgage with the isa as the capital repayment vehicle.

Thank you

Anna Bowes, Investments Manager AWD Chase de Vere, Bath, Tel. 01225 368676 answers: You can either set up a new ISA each year, or add to a previous ISA, it depends on the interest rate that you are being offered, as this should drive your investment decision.

It is worthwhile regularly reviewing the interest rate that you are earning on each of your cash ISAs and transferring them if the rate becomes uncompetitive. .

Depending on how long it will be until your mortgage needs to be paid off and if you are happy to take some investment risk, you may want to consider investing in the stockmarket as over the long term, this could provide a far better return than cash.

If you are looking to be ultra secure, consider overpaying the mortgage rather than saving in cash, especially if the interest rate you are paying on your mortgage if greater than the amount you will earn on your savings.

8. Phil in the Midlands asks: What is better for me,an asset loan or personel loan?

Simon Webster, Managing Director at Facts & Figures Financial Planners Ltd Kent Tel: 01233 813313, answers: Depends on what you mean by an asset loan. If by this term you mean HP then a personal loan is almost certainly a better bet.

Northern Rock and Alliance and Leicester usually offer amongst best personal loan deals Google personal loans

9. Shivvy in London asks: I have �59,000 outstanding on my mortgage, presently on a variable rate with 22 years left to run, I can just about afford to reduce the outstanding balance to �55,000 and wish to reduce the term of the mortgage to between 10 & 15 years.

Should I seek a fixed rate mortgage? If so should I fix for 10years or less?

Simon Webster, Managing Director at Facts & Figures Financial Planners Ltd Kent Tel: 01233 813313 answers: There are two issues when considering a fixed rate. The first is affordability - if you are tight on monthly income relative to your expenses a fixed rate will give you certainty if you can afford to shorten the term it sounds like this is not an issue for you.

The other issue is what is likely to happen to interest rates.

While another 1% over the next 12 months cannot be completely discounted most pundit agree that with an election in the offing and inflation starting to slow - coupled with some signs of slowdown in the housing market rates should soon start to come down again (I hope so as I have a number of properties all mortgaged!).

The trouble is one can only know the answer to your question in 10 years time. For me the time to buy a fixed rate is when rates are low.

To me they are on the high side; you'll have to make your own judgement but if you can afford to accelerate your payments you should be able to weather a rise...so I'd probably opt for discounted variable

9. Dennis in Fleetwood, Lancs asks: I used my visa debit card to purchase an airport transfer service from Alicante to Benidorm from Mediterranean Holidays plc through Pay Pal Secure server.

Pay Pal deducted the amount from my account and sent to me their own receipt for the transaction. On arrival at Alicante our transport failed to turn up and we had to organise a taxi that would fit our luggage plus my wheelchair.

I have tried to contact the sellers of this service by phone and by e-mail with no success, their London office is just an answering machine, I have also complained to Pay Pal about their member and tried through them to get a refund, they just don\'t want to know.

Is there any other way that I could get my money back, or is it now lost for good and another learnig experience. Looking forward to hearing from you. Thanking you Dennis.

This is mainly outside our experts' remit, but Simon Webster suggests you try talking to VISA to see if they provide any cover.

10. John Matthews in Northern Ireland asks: I am about to change my mortgage provider after 14 years for hopefully a better deal.

Can you tell me how a �21000 mortgage,which I took out 14 years ago,can amass more than �14000 in interest payments.I still owe my Lender �17000+ from the original mortgage and find it astonishing that I still owe almost 90% of the mortgage.

I have taken out loans and when added together would have paid the original mortgage with a lot less interest being charged.Is this a normal thing or have I been ripped off these last 14 years, thanks.

Simon Webster, Managing Director at Facts & Figures Financial Planners Ltd Kent Tel: 01233 813313 answers: If you borrowed �21000 and now owe �17000 you owe 81% of the loan so its not perhaps quite as bad as it seems.

Without fully investigating your account I cannot say but in theory �21000 at 7% over 25 years should have about �13500 o/s now. .

If your rate has been higher but your payment has stayed the same then the figures quoted may be right. You can always ask the lender for an account statement from inception - there may be a fee - then show it to a local IFA for comment

11. Mr Harper in Northern Ireland asks: I would like to open a good old fashioned account that pays a decent interest rate other than internet or postal account ie at a local branch.

I know the best rates are with the latter but wondered if any of the major banks or building society current accounts or otherwise offer for the older generation who are not computer literate etc.

Many thanks

Simon Webster, Managing Director at Facts & Figures Financial Planners Ltd Kent Tel: 01233 813313 answers: The only answer to this question is phone the local branches that are near to you and see who's offering the best rate at a branch you can access easily.

Many Building societies have branches in their main areas of operation - Birmingham Midshires or Kent reliance for example, but not in other areas...

12. Ron in High Wycombe asks: I want to place savings of around �50000, where should I put them to get the best safe return, I am 65 years old and still work part time, I would be looking to sell up and move abroad within the next three years.

Amanda Davidson, Director of Baigrie Davies, www.baigriedavies.co.uk answers: Within 3 years is a difficult timescale if you are looking to sell the investments at that stage.

I would urge you to consider what your longer term plans are. You probably do not need income from the investment as you are working. However when you move you may need income.

You may like to consider an offshore bond that could remain in place once you leave this country. Consideration of this will depend on where you propose to settle.

The underlying investments can be changed easily to reflect drawing income in the future and these types of investments lend themselves to paying a regular income. There can be tax advantages too. Seeking independent financial advice would be a sound first step.

Or, Dane Halling, Arcturus Investments Tel. 01264 811 142, asks:

As you are planning to sell in 3 years which will release potentially significant equity, I would suggest the National Savings 3 year bond would be suitable option, on a 5.6% gross rate.

I assume you have made full use of your ISA allowances. NS&I offer 6.05% tax free up to �3,000, equivalent to 7.56% for basic rate taxpayers.

13. Mr Dawson asks: I have a Halifax tracker mortgage which was taken out over 25 years in Sep 2002.

This takes me beyond my retirement age by some years (born 1953, retirement 2018 assuming 65 retirement age, leaving 9 years on the mortgage.

We want to look at either moving or extending our current property both of which will involve extra mortgage, but I am concerned that lenders will not allow me to take the loan beyond 65.

Am I right to be concerned? I have a pension maturing in 7 years time which will pay around £9k per annum. Will this help?

Peter O'Donovan, Mortgage Manager at Bestinvest (Consultants) Ltd Tel. 020 7189 9981, answers:

Most lenders now do not preclude borrowing into retirement.

If you can prove to a lender that you have the disposable income to cover the monthly mortgage payment along with the normal monthly outgoings then there is no reason for your application to be declined on that basis.

Halifax has, in fact, a product designed to assist people borrowing in their retirement.