SW writes: I’m having a problem with my Woolwich mortgage. At the start of this year my monthly mortgage payments suddenly increased by almost a quarter, with no prior warning or explanation.
As interest rates were falling at the time, I could not understand why. I made at least six phone calls to the Woolwich customer-service line in January, but two meetings and a further 10 calls later I am still waiting for an explanation and a readjustment of the monthly payment.
Woolwich has now got to the bottom of what happened. It appears you originally had a repayment mortgage, but this was changed some years later to a part interest-only, part repayment loan.
When your payments were calculated last December, the sums were done on the basis that the loan had been on a “part and part” basis since inception. The capital sum outstanding was therefore overstated, which led to higher monthly payments.
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Your repayments will fall to the correct amount as from this month. As you requested, the bank will be refunding the overpayments as soon as it has completed the detailed calculations. It has also sent you an ex-gratia payment of £250 as an apology.
Judging by the letters I receive, Woolwich has a big problem with its mortgage administration — complaints are not being dealt with anything like quickly enough.
The latest news on baby bonds
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CP writes: I read earlier this year that the government was going to give each newborn child a lump sum to be saved until they reach the age of 18. Can you tell me when it will start and how I can claim it?
The proposed Child Trust Fund is expected to come into operation in April 2005. All children born on or after September 1, 2002 will be eligible. The amount will be £250 for most children, and £500 for those from families who qualify for the full Child Tax Credit. Families will be able to add up to £1,000 each year until the child reaches 18.
That — so far — is about all we know. The Treasury plans to produce a more detailed paper in September.
The money will have to go into an approved savings scheme, and there will probably be some sort of tax benefit. But we’ll have to wait for the paper for more details.
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Doubling up on pensions
CS writes: I have put £50 a month into a personal pension for a few years, but I have recently started paying £35 a month into a company scheme. Is this OK?
If you do not earn more than £30,000 a year and are not a controlling director of your company, you can contribute to both a personal pension and your company scheme.
If you earn more than £30,000 a year, you should still be able to contribute to both once the new Pensions Act comes into force — probably in April 2005. But full details on this liberalisation have not been finalised.
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Beware of Child Credit clawback
SP writes: I applied for the new Child Tax Credit online earlier this year and have received £30 a month since April. The application is based on our income for the 2001-2 tax year. My husband has received several pay rises since then which I think may make us ineligible.
I have tried contacting the tax-credit helpline without success. But somebody at my local tax office suggested I spend the money anyway. He said: “You can always plead ignorance. Thousands of mistakes have been made and it will be uneconomical to follow them up.”
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I’m surprised tax-office staff feel they can be so cavalier about our money. The Revenue’s head office went ballistic when I told it what one of its employees had said.
According to the booklet Child Tax Credit and Working Tax Credit: A Guide (WTC2) — which you can view at www.inlandrevenue.gov.uk/pdfs/wtc2.htm — yes, you may have to pay it back. Claims for the credit this year are based on income for the 2001-2 tax year, and thereafter on income in the immediately preceding year.
If your income in the current year is no more than £2,500 above the level at which you claimed, you will be allowed to keep the money. But the guide states: “You should tell us immediately if you think your income will rise by more . . . this will help you avoid an overpayment of tax credits which you would have to pay back after we finalise the award at the end of the year.”
The general Tax Credit Helpline number is 0845 300 3900 (Northern Ireland: 0845 603 2000). I got through after only a couple of minutes. I think it would be worth trying again now the initial rush of queries looks to be over.
E-mail Diana Wright at questionofmoney@sunday-times.co.uk or write to A Question of Money, The Sunday Times, 1 Pennington Street, London E98 1ST, giving a daytime telephone number. We cannot send personal replies or deal with every letter. Please do not send original documents or SAEs. Advice is offered without legal responsibility