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Do the fairies pay for commission?

I will try to squeeze three points into a short letter. First, Julian Stevens&#39 mortgage idea (Money Marketing, August 15) is seriously flawed.A repayment mortgage repays capital from day one.

I did a quick illustration and 15 years into a 25-year mortgage on a repayment basis, 40 per cent of the capital has been repaid – in this example, £33,000 out of £80.000).

The flexibility is a good idea, but overpaying mortgages to shorten the term is old news.

Second is the capital-protected annuity. Cross-subsidy is essential to keep annuity rates up. If the capital is returned, there is no mortality factor and annuities become more expensive.

The capital return will be an alternative to a widow&#39s pension and that is not necessarily a good thing.

Presumably, any return would be taxable, as it would be under drawdown, so how would this benefit a widow who would otherwise be a nil-rate taxpayer? She would probably have to invest the (taxed) money to provide an income – in an annuity perhaps?

Finally, I cannot understand why Sandler thinks that commission is paid by the provider. If it is, then it must be a cracking deal for the customer because he gets our advice for free. If it is not the customer who pays it,who does – is it the fairies?

Phil Gammon

The Dunne Partnership,



NIBi – Target Return Fund

Thursday, August 22, 2002Type: Fund of hedge fundsAim: Growth by investing in hedge fundsMinimum investment: Lump sum £20,000, US$ 25,000Place of registration: Isle of ManInvestment split: 100% in hedge fundsIsa link: NoCharges: Initial up to 5%, annual 1.75%Commission: Subject to negotiationTel: 01624 630300

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&#39Cut the gap with 2% cap&#39

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Brexit: what to expect in the aftermath

James Dowey, Chief economist & CIO In these very early stages following the “Leave” win any prognosis is by its nature highly tentative. It will be weeks before we are able to measure the acute impact of the result on the UK economy, and there are clearly no close historical parallels on which to base […]


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