To think that this is daylight robbery.

(13 Posts)
Graceflorrick Mon 01-Aug-16 20:47:47

DH and I have paid off our mortgage but we are wanting to put an extension onto the house, so we're looking to remortgage for 30k maximum. Given the equity in the house, I had assumed we'd get a good interest rate etc. After looking at lots of mortgage offers I've realised that banks are now;

Charging a 'product fee' to customers to get a mortgage, generally around 2k. That's around 2k every single time a mortgage needs to be renewed - some people could be paying this every two years.

They are borrowing the nice cheap money that they've been given to kick start the economy and charging quite high rates. Some are 1.99 for two years and then 4.89 for the remainder.

Banks now effectively have interest and large lump sums of money through the produce fee.

Given that we, the general public have had to bail them out, I find the fact that they continue to thrive to this extent very irritating indeed.

This is daylight robbery, endorsed by the government - no?

YelloDraw Mon 01-Aug-16 20:54:04

Huh?

You can fix for longer than 2 years if you want.

It is normal to revert to SVR but most people fix again.

You generally don't have to pay an arrangement fee if you fix with the same lender for another 2 years,.

The better the rate and/or the longer the fix, the higher the arrangement fee generally, but shop around.

Interest rages of 1.5% ish are typical at the moment for 70% LTV - hardly daylight robbery.

Bank base rates ar 0.5% - mortgage at 1.5%. Comparable if not better than when base rate was 5%, mortgages were 6.5%. They are always above base rate!

Nothing has changed, nothing is new here. It was the same thing when you took your mortgage out.

You sound a bit conspiracy theory-tastic OP, don't like it - don't HAVE to have a mortgage.

Eminybob Mon 01-Aug-16 20:56:17

I think you need to shop around. There are plenty of low fixed rates with no fees at all on the high street.

Graceflorrick Mon 01-Aug-16 21:01:47

My first mortgage didn't have an arrangement fee, we had 125% mortgage (so that we could furnish our new house), interest rate around 5% and it lasted for 4 year. At that point we went elsewhere, still no arrangement fee and a lower interest rate.

The banks are taking advantage and I find it really odd that you are defending the corporate machine! Unless you are a banker confused

As it happens, we've decided we won't indulge their greed and will be finding another way to raise the capital for the extension.

I'm still outraged on behalf of everyone else though. I find the current situation absolutely disgusting.

Graceflorrick Mon 01-Aug-16 21:03:30

Eminy - the product feed have shocked me to the core.

Katy92 Mon 01-Aug-16 21:06:44

125% mortgage?!?! My word, what i'd have given for such a treat!!

Graceflorrick Mon 01-Aug-16 21:09:59

We wouldn't have been able to get on the housing ladder without it, I think it's very wrong that people from all socio-economic backgrounds are not supported to buy houses anymore. We still had to paying all back,of course, so the bank still made money - but it meant that we could buy our first house at the time we wanted to.

BarbaraofSeville Mon 01-Aug-16 21:17:12

The whole 2 Yr fixed rate with fees is a huge con, preying on people's fears about rate rises. We've rarely paid fees, or taken a fixed rate and went onto a lifetime tracker about 8 years ago with a small fee when I realised that it was very strongly weighted into the banks favour having everyone on short term fixes that renew regularly.

We have saved thousands compared with short term fixed rates and I would be very surprised if rates went up significantly in the short to medium term because it would totally fuck the economy - there is a lot of business and personal debt out there still.

What about something like the HSBC Lifetime tracker fee saver, 2.9% and no fee?

www.hsbc.co.uk/1/2/mortgages/products?pcode=A001006107000000000000000000

(Other products may be available - we have a lifetime tracker with HSBC and it has been brilliant)

Or if you have a good income could one of you take a personal loan - we paid for an extension with savings and a £10k over 3 years personal loan - no fee and interest rate of 3.9% - we didn't remortgage because mortgage rate is less than 1% pa so will hang onto that for dear life for as long as possible. You probably won't get more than £25k but could sort out the shortfall with credit card balance transfer stuff if you have a good income and credit rating.

Graceflorrick Mon 01-Aug-16 21:29:46

Thanks Barbara, we'll find it another way now.

I still feel very cross about what these banks are able to get away with. It's unbelievable.

FullOfChoc Mon 01-Aug-16 21:32:10

I'm just in the process of remortgaging to do an extension, we had a tiny bit left on our mortgage and are borrowing another 50k. I've got a rate of 2.39% fixed for 5 years.

I used London and country, as recommended by Martin Lewis (Moneysavingexpertcom). www.landc.co.uk/?gclid=CISJntiHoc4CFWsq0wodtUIBaQ

Graceflorrick Mon 01-Aug-16 21:46:16

Thank you Full. I'll have another look.

Liiinoo Mon 01-Aug-16 22:16:19

When I worked in the mortgage industry the fees charged were nominal but the interest rates were much higher. I can remember a time when our top rate on savings was 10% and the typical mortgage rate was 15%. That gave the Lenders a before costs profit of 5%. Nowadays the differential between lending rates and borrowing rates is much smaller - a mortgage might be charged at 2.5% and the savings at .5% giving a notional - of just 2% and often less. The higher fees charged are probably replacing some of that lost revenue.

TheNaze73 Mon 01-Aug-16 23:10:27

Spot on Liinoo The lenders are looking to ultimately get their money back & make a profit & the margins have been squeezed.

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