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“We took out a secured loan on our house 10 months ago,...”

written by cerruti on 06/10/2006

Good Points
I can't really think of any

Bad Points
Early settlement rate (amount of interest added)
Extortionate interest

General Comments
We took out a secured loan on our house 10 months ago, and we were encouraged to take the insurance plan with the loan. According to our agreement the insurance premium was £113.00 per month on top of our monthly payment. We were advised that if we didn't make a claim we would get £10,000 back at the end of 5 years (this is the amount of premiums we would pay over the 5 years). However, we had a rethink and decided to cancel the insurance premium thinking that we would be £113.00 better off each month. We were quite shocked when we were told that First Plus would only refund £2995 of our £10,000 insurance premium, only reducing our monthly insurance premium by £30.00. Therefore, in effect we would need to pay the remaining £7000 for an insurance which we would have cancelled, not to mention the interest which they have probably added on also. This would have meant that we owed over £7,000 more than our original amount borrowed, and we only had the loan for 10 months. We now have no option but to keep the loan for 5 years. I would strongly recommend anyone not to take the insurance, because First Plus pays the full insurance amount which in my case is £10,000 to the insurance company up front, and this is then added to your loan. By the way, if you decide to take the insurance and don't make a claim within the 5 years, make sure that you write to First Plus within 30 days of expiry date of the insurance (5 years) to claim your cash back or you will lose it. It is not automatically refunded back to you.