to think that ordinary people should not have to take a punt on their mortgage rate?

(341 Posts)
Mintyy Wed 08-May-13 18:39:22

Just had letter from our building society.

Our mortgage is going down from £800 and something a month to £379.75.

This is because we opted for a fixed rate 5 years ago when rates were 5.something % (sorry for vague details, but ykwim).

Now that "offer" has come to an end so we are going on to the standard variable rate which is currently 2.5%

I could RAGE, SCREAM AND WEEP at the amount we would have saved over the past 5 years if we had not opted for a fixed rate at the time.

Aibu to think that I didn't ask to take a punt on what mortgage rates would do, I am not a gambler and I am not interested in taking risks.

It really makes me absolutely hopping mad I tell you!!

iamsmokingafag Wed 08-May-13 18:40:57

We did the same ( kicks self)

BonaDea Wed 08-May-13 18:43:24

Yabu

Presumably you chose a fixed rate at the time for the certainty that provided in case interest rates went very high and your monthly rate with it.

I doubt anyone forced you to take a fixed vs variable rate at the time!

OldLadyKnowsNothing Wed 08-May-13 18:43:28

But think how overjoyed you'd have been all these years, had interest rates sat at 15%, as they did not so long ago?

Crikeyblimey Wed 08-May-13 18:45:15

We were in a similar position a few years ago and, thankfully, have been on the variable rate for a while now.

Galling as it is, fixed rates are just that - fixed. You benefit when rates go up during the term and lose out when they go down. Nobody can predict with any accuracy what will happen and we all just have to make the best choice based on information available.

Please don't be cross - you'd be laughing your socks off if rates had gone up dramatically during your five years.

YABU.

It could well have gone the other way and right now you'd be laughing.

Carry on paying the £800 and something if you can afford it, and watch the capital come right down.

Dawndonna Wed 08-May-13 18:48:04

Have you not ended up paying extra off your mortgage? (Not sure how it works).
And, if you managed that much albeit tight, would you be better off in the long term paying more than the SVR so that your mortgage is paid sooner?

pootlebug Wed 08-May-13 18:50:37

But that's what fixed rates are for - so that you don't have to take a punt, but know exactly what your payments will be. Or are you looking for the whole financial system to change?

Mintyy Wed 08-May-13 18:51:32

I do KNOW what a fixed rate mortgage is you know!

Its a very long time since interest rates were 15% btw (I did have a mortgage at the time).

AnyFucker Wed 08-May-13 18:51:33

Keep overpaying is my advice.

This happened to us some time after the massive interest rates just after 1990 (we were paying 13% at one time). We took a fixed rate of 6% and then watched while the rate went down month after month after month.

6% seemed great at the time. Don't regret, it is wasted energy.

I took a mortgage three years ago. As I only had 10% deposit only two providers would take us, both with specific mortgages for first time buyers both fixed at between 5.5 & 5.9%, so although rates were 1% at the time and we all KNEW that rates wouldn't go up in the three years forthcoming, it was that or nothing. That was unfair.
Yabu, you knew it was fixed. Even with variable it is, as you say, a punt, you gamble that rates will stay lower than the proposed fixed rate. You had a choice.

Mintyy Wed 08-May-13 18:53:01

Pootlebug - yes, am looking for the whole financial system to change. What benefit is it to the ordinary homeowner with no knowledge of the financial markets to take a punt on their mortgage? Which is all that these deals represent.

Squitten Wed 08-May-13 18:53:06

YABU

A fixed rate provides protection for you in case the interest rates went the other way, which they could have. Either way, you are taking a risk.

Mintyy Wed 08-May-13 18:54:10

I know its wasted energy AnyFucker, but why is it like this? Why does the system do this to people?

AnyFucker Wed 08-May-13 18:56:14

I dunno, Mintyy. If I had the answer to that, I would be a very rich woman.

Why do bankers still get massive bonuses even though they contributed massively to fucking up our country ?

Another one of life's rather massive mysteries.

minouminou Wed 08-May-13 18:56:53

Yup! Overpay and make the most of the low interest period.
There's an overpayment calculator that shows you how much you'll knock off your mortgage term if you pay off a certain amount every month.
Just an extra tenner a month can take off three months or more.

Saski Wed 08-May-13 18:58:19

There's no one there to protect borrowers from interest rates going up if they can't fix rates. I can appreciate your frustration, but it's no more useful than railing on about your homeowner's insurance that you pay for and never use. Best not to think about what could have been.

Mintyy Wed 08-May-13 18:59:13

Thanks minou but we are already overpaying the maximum each month as it is.

DolomitesDonkey Wed 08-May-13 19:01:00

Yabu.

In your own words you're not a gambler so you took a fixed rate. There's your answer.

Mintyy Wed 08-May-13 19:01:12

Well, I don't exactly agree Saski. I know why I am paying my insurance.

I don't really know why I have to make a choice between fixed or variable rate? It is an invitation to take a punt!

As I said, most home owners probably do not want to take a gamble on their mortgage payments.

AnyFucker Wed 08-May-13 19:02:08

Are you a Conspiracy Theorist, Mintyy ? smile

Mintyy Wed 08-May-13 19:02:17

Are you saying that anyone who chooses a svr is a gambler then Dolomites? And what advice do they get before taking that bet?

MrsHiddleston Wed 08-May-13 19:03:52

I'm guessing you'd have felt differently if interest rates were currently 15%?!

That's what fixed rate is, you do have choice! I recommend you keep paying the £800 if you can and pay off your mortgage quickly.

Bearbehind Wed 08-May-13 19:05:17

What do you mean when you say you want 'the whole financial system to change'?

No one forced you to fix for 5 years. At the time you obviously thought there was a risk of interest rates going up- they didn't so you lost out but them's the breaks.

You can chose from a fixed or a tracker mortgage over whatever term you want- what more can the financial system possibly offer?

No one can predict what will happen to interest rates or the economy so you have to make a choice and live with the consequences.

Presumably you were aware that mortgage rates have been coming down over the past couple of years. It is possible to get out of these deals, often with a penalty to pay but if you'd be saving loads of money it could possibly have been worth it. I know this doesn't help you now but might help others.

I work with mortgages and am certain that part of the sales process is to ascertain what your attitude to risk is (ie can you afford for rates to go up or do you want the security of fixed payments) and what your view of how rates might behave in the future and how to protect yourself in that instance. You couldn't possibly have been pressured one way or the other and your paperwork will say this.

You may have viewed choosing a variable rate as a 'punt' at the time, perhaps that's why you chose quite a long term fixed rate.

Doyouthinktheysaurus Wed 08-May-13 19:09:22

You have a choice though, you didn't have to take a fixed rate!

It's gutting when interest rates go down and you don't feel the benefit, I know, we've been there but that's the risk we took when we took out a fixed rate mortgage and we were well aware of it.

We've also had the benefit with our first deal of fixing and interest rates rising so it does work both ways.

For us, when we first bought and money was tighter, fixed payments each moth was a godsend and we were able to budget accordingly. That is the benefit for lots of people.

orangepudding Wed 08-May-13 19:09:52

Now you are not on a fixed rate you can probably over pay more without being charged.

We also fixed before the rates dropped, we wanted managable payments. It was a gamble that didn't pay off but gave us peace of mind when we fixed it.

AnyFucker Wed 08-May-13 19:10:58

I would be interested to know the percentage overall of people who did/did not benefit from fixed interest rates

I think I know the answer though....

derektheladyhamster Wed 08-May-13 19:11:37

We were in a similar situation when in the summer of 2007 we took a fixed rate mortgage angry . 2 years later we changed (and paid an early redemption fee) to move to a variable rate. You could have changed it, although there would have been financial penalties. We had a variable rate in 1997 and it crept up and up. swings and roundabouts.

Saddayinspring2 Wed 08-May-13 19:11:56

I do sympathise as Banks do screw us over while pretending not to..... However, interest rates have been very low for a long time... And were generally expected to stay low in line with the rest of Europe ..

So yabu <ducks>

<grin>

Mintyy Wed 08-May-13 19:13:27

"You have a choice though, you didn't have to take a fixed rate!"

I am not sure how many more ways I can put this:

The WHOLE point of this thread is that I did not ask for a choice, I did not want a choice, I think it is wrong to make people make a choice.

Bearbehind Wed 08-May-13 19:17:29

So what do you propose, everyone goes on a tracker today when interest rates are 0.5% then in 10 years when interest rates might be 10%, no one can meet their mortgage repayments - genius idea that one!

The choice is given so you can try and plan your future repayments, you might get it right or you might get it wrong but that's life.

Crikeyblimey Wed 08-May-13 19:17:56

Sorry - but do you buy anything else without a choice?? That is just a bonkers response.

Also - if the rates have reduced so much whilst you e been fixed rate, why didn't you investigate switching to a variable rate, taking the early repayment hit. If you'd have done the sums it could have been worth it.

This is the biggest financial commitment most people ever make. It makes me very cross when people don't take charge and feel things have been "done to them".

I know you're cross but get a grip and pay more attention nex time.

AnyFucker Wed 08-May-13 19:20:07

Mintyy, that is a bonkers idea !

It's called a free market. Where the fuck would be without it ? Stalinist Russia ?

AnyFucker Wed 08-May-13 19:20:20

would we be

Ilikethebreeze Wed 08-May-13 19:23:01

I understand what you are saying Mintyy.

And , if I understand it all correctly myself,even being on variable is a potentially riske choice too?

Also, and perhaps you understand this all better than me, you havent overpaid your mortgage, just paid more for it? Or have I got that point wrong?

tbh, I am not sure why there is such a huge difference in your figures.

Saddayinspring2 Wed 08-May-13 19:23:06

What minty means is she should have been properly advised to take the best mortgage in the current climate

Saddayinspring2 Wed 08-May-13 19:23:54

And most people knew that rates were very low

SJisontheway Wed 08-May-13 19:24:51

The insurance analogy was a good one. You were paying a premium, but had peace of mind that you could afford your repayments for the fixed term. You were insured against interest rate rises. It wasn't gambling at all. It was the opposite of gambling. You knew exactly where you stood and what your repayments would be. Variable would have been more of a gamble - one that would have paid off in this instance, but that's hindsight.

Mintyy Wed 08-May-13 19:26:33

Crikeyblimey - anything else I buy with a choice has a fixed price. I know its either going to cost me a or b.

Or am I missing something?

Bearbehind Wed 08-May-13 19:26:42

But the whole point sadday is that the 'current climate' is not what it was 5 years ago.

mintyy was probably made well aware of the alternatives in 2008 but no one then would have predicted interest rates going so low for so long.

Opting for a 5 year term, unless interest rates are rock bottom as they are now, was always a gamble.

Bearbehind Wed 08-May-13 19:29:27

minty you really are missing the point- you might chose to buy anything today at one price, but tomorrow the price might shoot up or down- you take the risk to buy it today at the price offered today but it may turn out to be a bad or good decision in hindsight.

Crikeyblimey Wed 08-May-13 19:31:13

What Bear said.

MTSCostcoChickenFan Wed 08-May-13 19:32:07

When people talk about the blame culture I think that this is what they mean grin

You could have done nothing ie let your rate remain variable but you thought that the rate was going to go up so you elected to fix it. If the rates have gone up you be so smug with all your financially simple friends.

The whole thing isn't exactly rocket science yet you seen to think that you got duped into it.

 

NatashaBee Wed 08-May-13 19:32:28

In the US where I live, rates can be fixed for the life of your mortgage. We are at 5%, which is perfectly bearable although rates are now dropping to the point that we could save ourselves a few hundred dollars a month by refinancing. I don't see why it's not possible to allow a 20/30 year fixed rate in the UK as they do here. You might lose out due to interest rate fluctuations at times, but at least you have some security in knowing what your loan rate will be for the life of the loan.

Crikeyblimey Wed 08-May-13 19:32:45

The new mortgage you've been offered is a different product. Ok, it is doing the same job but it is different and wasn't available 5 years ago at this price.

Glittertwins Wed 08-May-13 19:33:20

Having been bitten by rates going up on a capped mortgage, since the cap was too high, we have had fixed. Sometimes we have won but as rates fell, I suppose we lost if you look at it that way. I prefer to know exactly what the monthly payments are each month. It was our decision and that's exactly what this about. Maybe you should have looked at offset or tracker rates instead but if you want the best deal, it won't necessarily be handed to you. Financial institutions are in business to make money. It's up to us to get the best deal out of them.

Mintyy Wed 08-May-13 19:34:40

SJisontheway - the insurance analogy isn't a good one. Insurance is a product for a fixed price which might change if I make a claim.For insurance I am quoted a price and can shop around.

For my mortgage I can shop around but I am quoted 3 prices, 2 of which might change at any time, and I have no idea how to predict that.

A better analogy would be to compare it to going to Sainsburys for your weekly shop. Fill your trolley and take it to the check out. One checkout says the price is £100 and it will be £100 tomorrow. Another checkout says the price is £100 but it might be £50 tomorrow or it might be £150 tomorrow, fancy your chances?

Bowlersarm Wed 08-May-13 19:36:27

I don't understand why you think people shouldn't chose their mortgage?

I'm sure you're pretty much on your own to think that people shouldn't have or want a choice.

Doyouthinktheysaurus Wed 08-May-13 19:38:09

Choice is a positive, not a negative thingconfused

Once upon a time all you had we're the standard variable rates, the introduction of fixed rate and trackers gave people more options, reflective of their ability to absorb changes in rates and the level of risk they are prepared to take.

Mintyy Wed 08-May-13 19:40:16

"You could have done nothing ie let your rate remain variable but you thought that the rate was going to go up so you elected to fix it. If the rates have gone up you be so smug with all your financially simple friends."

I'm guessing at what you mean by your second sentence.

Well, no, I don't think I would have been smug as I am really not by nature a smug person, if you can imagine such a thing MTS?

I didn't think the rate was going to go up! I didn't know! Who knows? Even the experts don't know.

I didn't think the rate was going to go down either. How the fuck would I know?

So I did what I thought was the average sensible fence-sitting thing.

And spent as much as £400 x 12 x 5 more than I needed to on housing my family.

AIBU "to think that ordinary people should not have to take a punt on their mortgage rate?"
Well, nobody (oerdinary or not) has to 'take a punt'. It's a choice. You made that choice to have certainty. The cost of that certainty was higher than you had thought it would be.

Would you rail as much if the end of your fixed-rate had meant your monthly payments had risen to £1200?

Ilikethebreeze Wed 08-May-13 19:41:55

I think the problem is Mintyy, that the price of everything can go up or down over time,including borrowing money.There is a demand and supply situation going on for money, as well as everything else. Think oil, electricity, cars etc.
Buuuut, thinking about it, I suppose the situation used to be , mortage rate is 5% for example, take it or leave it?

MrsHiddleston Wed 08-May-13 19:42:14

You don't want choice?! Seriously?!

Why would you not want choice? I'm baffled! In what others areas if your life do you not want choice.

Do you choose which supermarket you shop in based on price and convenience? Do you choose which school to send your child too based on reputation and convenience? Do you choose which hospital you want to be treated at based on reputation and convenience? Do you choose who to bank with based on interest rates for your savings and the golden hello offers?!

Seriously?! You'd rather have no choice?

Mintyy Wed 08-May-13 19:43:24

Mrs Hiddleston! You seem to be a bit hysterical!

Crikeyblimey Wed 08-May-13 19:44:34

I thought you said you'd been overpaying?? Did you mean you'd been paying more than the minimum payments? If so, you haven't paid all that much "too" much.

Also - you must have noticed the bank rate has been very low these last few years. I guess I'd be kicking myself too for not switching sooner but to blame someone else for this decision is frankly bonkers.

Talkinpeace Wed 08-May-13 19:45:02

Only the British mortgage market is this dysfunctional.
In places like the US, long term fixed rates (over 10 years) are the norm - so banks have less incentive to bugger about with rates.

andubelievedthat Wed 08-May-13 19:45:50

If you do not chose your repayment way ,who would you like to? and if someone else did,would you complain if the same circumstances occurred that it was their fault you seemingly lost out on saving oodles of cash? you seemingly want no responsibility for your financial affairs so, you feel you are smart enough to have a mortgage? sour grapes really ,correct?

Mintyy Wed 08-May-13 19:46:20

"Would you rail as much if the end of your fixed-rate had meant your monthly payments had risen to £1200?"

Erm ... yes? of course I would. That would be awful.

They shouldn't have even given you a mortgage if you didn't understand the implications of what you were signing and if you didn't u see stand you shouldn't have signed or at least have educated yourself before signing what is essentially the biggest loan agreement of your life.

FFS you made the choice!

Bowlersarm Wed 08-May-13 19:46:58

That is the nature of having a mortgage, unfortunately. You will always have this problem as long as you have one. No one can predict when base rate will go up/down, although everyone tries to be an expert.

Overpay OP, get rid of it as soon as you can, then you don't have to deal with it anymore.

Mintyy Wed 08-May-13 19:48:24

grin

Bobyan Wed 08-May-13 19:48:46

Op: am I being unreasonable?
Nearly everyone: yes
Op: no I'm not

Why bother asking?

Anyway if the difference between the fixed rate and the variable rate is so much, why not just pay the penalty and repay the fixed rate early and move mortgage?

Mintyy Wed 08-May-13 19:49:33

grin was for the wonderfully articulate madamecastafiore.

TheDoctrineOfSnatch Wed 08-May-13 19:51:23

Mintyy, broadly speaking, at the time you were offered a five year fixed rate, the bank would have borrowed the money in the money markets on a five year term.

The interest rate at which it borrowed money would have been different to the one year rate, the two year rate etc.

Five years ago, money market rates for five year loans were probably higher than they are now because markets also expected interest rates to rise within the period. So your bank would have made a profit on your mortgage, as it must on all mortgages, but the profit would have been the margin on its five year rate, not on the sum of, say, five lots of one year rates.

Mintyy Wed 08-May-13 19:51:37

Bobyan - I think the penalty in our case was £2000 so I had to be pretty sure rates would remain very low. Once again - htf would I know that??

So, you're complaining that your repayments went down. You would have complained had your payment gone up. And you're complaining that you chose to keep it the same for the past five years. Hmm. Have you considered renting instead, Mintyy? You don't seem too happy with the whole borrowing thing.

"When people talk about the blame culture I think that this is what they mean grin"
grin grin

SmellsLikeWeenSpirits Wed 08-May-13 19:52:30

I know what you're saying. Mortgages are massive amounts of money and hugely complex and spread over a bloody lifetime. I don't feel qualified to make a decision about them. There's no other area in my life, so onerous, so huge and scary that I have to make choices about based in what little info I can glean from slimy salesmen with a vested interest

TheDoctrineOfSnatch Wed 08-May-13 19:52:32

Ie its cost of financing you for five years is more than if you had taken out five one year fixes.

Mintyy Wed 08-May-13 19:54:00

Thank you smellslikeweenspirits thanks for getting the gist.

PosyNarker Wed 08-May-13 19:59:52

YANBU to be pissed off, but...them's the breaks.

I don't expect lenders to get much sympathy but they also 'take a punt' on fixed rates. That's why the rate is generally a little higher than the variable rate and the longer term deals are never as good unless you think rates are going to go through the roof.

I do think more people should consult an IFA tbh about the right deal for their circumstances.

Surely unless you have pots of cash to burn, buying property always contains an element of risk? confused

Bobyan Wed 08-May-13 20:00:45

You could have either taken another lower rate fixed rate or gone to a capped tracker.

You pay your money, you make your choice.

You could always rent if the idea of taking responsibility for your investment in property offends you that much.

MrsHiddleston Wed 08-May-13 20:05:08

'hysterical' errrmm no...
'baffled' yes completely and utterly...

Perhaps if you don't understand mortgages you should try doing a bit of reading before you apply for another one.

MTSCostcoChickenFan Wed 08-May-13 20:05:21

Mintyy - the "sensible fence sitting" solution was to do nothing and stay variable.

Some experts thought that rates would go up. Some experts thought that rates would go down. So it wasn't as if everyone in the know stayed variable and conned the financially naive to take up a fixed rate.

A lot of financially savvy people made the wrong call as well so stop whining about poor naive little old you got sucker punched by the system.

We decided that the risk of not knowing where on earth the rates would go... out weighed the risk of it being higher if rates fell.

Try to enjoy the extra money and not dwell..... easier said than done but you know what I mean

SJisontheway Wed 08-May-13 20:10:45

The shopping trolley analogy makes no sense. The cost of the goods don't change over short periods of time. The cost for banks to borrow money change massively over the term of a mortgage. So what do they do? Offer you a fixed rate (at a premium) or a variable rate where you take your chances. In mintyy world where there is no choice, which mortgage type do you abolish? I would be pissed off if I had to pay over the odds for a fixed rate when I'm willing to take a gamble on a variable rate. Other buyers would be pissed off not to be offered the certainty of a fixed rate and insurance against rate rises.

Bearbehind Wed 08-May-13 20:12:46

Imagine if interest rates had gone up and your letter from the bank said your payments were going up to £1,200 per month- would you be moaning about your ability to chose then? Would you have posted saying I am pissed off that I have saved £400 x 12 x 5? I doubt it.

Get over it.

Life is full of decisions- some will turn out for the good, others less so. Would you really prefer to live in an institutionalised society which made all your decisions for you?

Your Sainsburys analogy is perfect which is why I don't understand your arguement- your shopping might cost £100 today and tomorrow it might cost £150 orit might be £50- you do have to make a choice.

The alternative might be that it costs £150 everyday from there on and I bet you'd moan about that!

FiveColourFISH Wed 08-May-13 20:15:32

OP, I'm amazed at the criticism you are getting here!

I 100% agree with you. It was the fear of being at the mercy of horrendous interest rates and having to somehow pull out a crystal ball and predict what payments could end up being that put me off getting a mortgage for years. Memories of the early 1990s etc.

It's crazy to me that chance, luck and factors completely out of ones control can end up determining a major expense like housing.

Bobyan Wed 08-May-13 20:16:42

Buying a property isn't compulsory.

BrianButterfield Wed 08-May-13 20:20:58

If, like most people, you aren't a financial expert, you're not forced to go it alone - there are lots of independent financial advisors out there whose job is to help people make these decisions. If you choose not to use them that's your lookout but you don't have to do all the research yourself.

FiveColourFISH Wed 08-May-13 20:25:14

But can't we have a discussion about alternatives to the current situation, at least? Even if the general consensous believes that the current system works? I think that's what the OP was saying.

FiveColourFISH Wed 08-May-13 20:26:29

Sorry, that post didn't make sense. I'm watching Friends and MNetting at the same time.

Bearbehind Wed 08-May-13 20:28:51

five I'm dying to hear the alternatives to the current situation- please tell me what they are?

We live in a free market, with readily available independant financial advice and a massive choice of mortgage products or the option to rent if you don't fancy any if the alternatives- please tell me how the situation can be improved?

MTSCostcoChickenFan Wed 08-May-13 20:35:03

During the New Year sales I overheard a shopper complain to sales assistant that she had paid full price for something before Christmas and now it was 30% off. She wanted the store to reimburse her the 30%. grin Some people eh?

Crikeyblimey Wed 08-May-13 20:36:37

But she asked if she was being unreasonable to think that "ordinary" people shouldn't have to take a punt on their mortgages.

She was told she was being unreasonable.

The system might not be perfect but there is a free market out there with lots of choice and alternative options such as not getting a mortgage at all.

FiveColourFISH Wed 08-May-13 20:37:00

Goodness knows - I thought perhaps a discussion might educate me?

Is it possible to have a 25 yr fixed rate, for example? At an average rate eg 3 or 4%. After seeing how much interest the bank is going to make off my repayments at that amount, surely that would be enough profit for them? And then I would know my housing costs forever.

Look, I realise that there is no perfect answer. I just saw the OPs post, I'm interested in financial stuff and thought I'd take a peek.

PosyNarker Wed 08-May-13 20:37:05

What is the alternative? No rate and a fixed 'fee' for borrowing (I believe there are some Islamic products like this). Not sure this is better for either consumer or bank.

I quite like offset products, but they are going out of fashion because of the low interest rates. They're good if you have cash but might need to access it, which is our circumstances,

Most banks don't have massive margins on their mortgages unless you are a high risk. Retail banking in the UK is a volume business. Of course some banks have lower costs and can pass that on and all will view your personal and property risk factors slightly differently.

Crikeyblimey Wed 08-May-13 20:37:55

Blimey - Bear. Are you me??? I didn't see your post till after I'd posted mine.

Mintyy Wed 08-May-13 20:40:55

Thank you very much Five for being able to understand what I am saying.

I am old (50) and have had a mortgage for many years. I will refrain from responding to the people on this thread who propose that I shouldn't have a mortgage "if I don't understand what I am signing up to".

Dh has just got home from work and we are discussing the letter. He said "we might just as well have taken the money to a casino". So he gets it smile.

Crikeyblimey Wed 08-May-13 20:41:54

The money the banks are lending us for our mortgages is essentially the money savers are putting into savings accounts (very very simply put). Therefore, if one bank offers a 25 year fixed arbitrarily plucked from the air rate - they would also fix their savings rates. Customers would soon move their savings to a more favourable rate paying bank and hey presto - bust bank.

Also - if the US model is so fantastic how come the arse fell out of their sub-prime market and helped us all towards rack and ruin faster than would have happened otherwise?

AnyFucker Wed 08-May-13 20:42:55

Mintyy, how many more years do you have on your mortgage ?

Bowlersarm Wed 08-May-13 20:44:00

Five but that it the very thing that the OP is complaining about.

You are saying you wouldn't mind the idea of fixing for 25 years? She did fix her mortgage and therefore knew her housing costs for five years, but it is the fact her mortgage payments have actually dropped that she doesn't seem to like, because no one knew, expert or otherwise, which way interest rates were heading.

Crikeyblimey Wed 08-May-13 20:44:41

Again - Minty, I know you are cross but if you'd taken the money to the casino you'd be living on a park bench or in a castle by now. This way you have the roof of your choice over your heads.

In your position, after a small "what if" grump, I'd be leaping up and down thinking of all that money you're saving from today onwards. Either save it, spend it on sweets or pay more off your new mortgage. Today is actually a GOOD day for you.

Bearbehind Wed 08-May-13 20:45:58

grincrikey

This is one of the most mystifying AIBU's I have ever read.

five that's the point though, there is no better alternative, hence no argument or discussion to be had.

If you weren't offered a choice then it is probably safe to assume that 5 years ago you would have been told to take a 5 year fix at the rate you did (as that was the decision you reached based on the information available to you).

Are you really saying you'd have been happy that 5 years on, that turned out to be a bad decision?

It seems to me you want all the benefits and upsides of a decision being made for you without the downsides if things actually work out better than planned.

Life just doesn't work like that.

Crikeyblimey Wed 08-May-13 20:46:09

Oh, and I'm not far off 50 so can't be accused if being a "bright you g thing" - I just care about the biggest financial commitment I've ever made to keep an eye on what I'm paying and why.

suburbophobe Wed 08-May-13 20:46:17

This just shows you have to take your own financial affairs into your own hands and not let anyone else do it - really!

Let this be a lesson for your future....

caroldecker Wed 08-May-13 20:48:17

Minty

you got a fixed price for your mortgage - for 5 years - you could have fixed for 25 yrs, but would have had a higher rate for the entire term.
Banks fund your mortgage from short term deposits and borrowing, so pay market rate. To fix your mortgage, they take the risk so charge more. The longer the fix, the higher the charge.

LondonMan Wed 08-May-13 20:48:56

The standard variable rate mortgage is an extremely risky product. If we were going to have a regulated market where everyone had the same kind of mortgage, we probably would have standardised it to have fixed rates. So YABU to think you would have been better off if choice had been taken away.

Bearbehind Wed 08-May-13 20:50:22

crikey I Think we might be the same person, I nearly PMSL at the post that said the UK mortgage market was dysfunctional compared to the US. It must just have been you and I that saw what the US mortgage industry did to the world economy..........

MummytoKatie Wed 08-May-13 20:50:32

I'm really confused. You didn't want to take a punt on your mortgage going up or down so you fixed your mortgage rate. Sounds sensible. You have had 5 years of knowing that whatever happens in the markets you can always pay £800 on your mortgage.

In fact had you taken the gamble your horse would have come in. But you didn't because you didn't want to gamble. But you are moaning because you don't get the mony from the gamble when you didn't put the stake up.

What did you actually want? To be forced to take a variable rate? But presumably you only want to be forced that now that you know the answer. Had you been forced into it and rates gone up and you were not able to afford your mortgge then you would have been really cross?

Or is it that you object to other people "winning" and in fact want everyone to be forced to take a fixed rate?

I just don't understand. You want a "third way". But what in the world is that? You can have fixed. You can have variable. I guess in the middle of that is "fixed for a short time then variable" but we already have that.

Buying a house is inherently risky. You are spending hundreds of thousands of pounds, that you do not have - meaning that you are generally ridiculously geared, on an asset. Which may fall or rise in value. "Which mortgage to get" is tiny in comparison to that!

Incidentally your choice probably only cost you over 4 years not 5 as rates fell in late 2008 and early 2009. Not much comfort but maybe a little.

Mintyy Wed 08-May-13 20:51:18

Crikeyblimey - I want to agree with you because I am in my real life a glass half full kind of person. Its just the small matter of £20,000 - £30,000 that's sticking in my throat

FiveColourFISH Wed 08-May-13 20:52:26

Fair enough. I'll leave it at that then.

Mintyy Wed 08-May-13 20:52:51

MummytoKatie yes I think the third way would be great. Somewhere in the middle of where interest rates have been for the past 30 years. Perfect.

Crikeyblimey Wed 08-May-13 20:54:40

I'd stop thinking of the 20 - 30k, that way madness lies.

You have had to pay something for your mortgage over the last 5 years. Look at your statement and work out how much actual capital you've paid off. Ask about making extra payment on this new one and if you can still afford the £800 then keep paying it and watch those numbers drop.

Mintyy Wed 08-May-13 20:57:06

Suburpohobe
"This just shows you have to take your own financial affairs into your own hands and not let anyone else do it - really!

Let this be a lesson for your future...."

Yes, thank you for that. Neither dh or I are involved in any way in banking or the finaicial markets. So we chose the route that cost us thousands and thousands of pounds. We did exactly what you said . We took our own financial affairs into our own hands. But a bona fide financial advisor could have given us exactly the same advice. We took a 5 year fix in May 2008. That is a long time ago.

I'd echo whoever pointed out that buying a property is not compulsory. Just out of interest Mintyy, what has the value of your house done since you bought it? You weren't just paying to house your family, you could have thrown £600 at a landlord in rent every month and done that. You were also buying an asset. You said yourself you don't like risk - by fixing your rate you removed the risk, unfortunately it cost you more than you would have had you taken it but surely you understood at the time that it could go either way confused?

Bearbehind Wed 08-May-13 20:58:21

mintyy what £20,000 to £30,000 are you referring to? That might have been the difference in your old and new mortgage payments over the last 5 years but interests rates have been at 0.5% for 4 years now and your redemption penalty was only £2k. You chose to stay in that position despite knowing what rates were as you thought the might go up.

EverybodysStressyEyed Wed 08-May-13 20:58:56

So you want the government to work out what the average rate would have been over the last 30 years and then tell the banks to use that rate for all mortgage products?

Mintyy Wed 08-May-13 21:02:02

"So you want the government to work out what the average rate would have been over the last 30 years and then tell the banks to use that rate for all mortgage products?"

Well it seems to be a fairly reasonable starting point?

Crikeyblimey Wed 08-May-13 21:03:09

This, I think is what many people missed. I don't work in banking or finance, I'm just bloody strapped for cash so I'm very very careful with my money.

I haven't always made the right choice. Who has?

However, if you'd paid the £2k to switch a few years ago, you'd have been saving for ages. I don't mean to sound smug. You really can only look to the future. I've said in almost every post that I understand you are cross. But you really only have yourselves to blame for taking your eye off the ball.

All that said - I really think you need to get last this and start being gleeful about what you will NOT be paying from now on. You can't change the past but you CAN enjoy the future.

MummytoKatie Wed 08-May-13 21:03:43

Look I'm 8 months pregnant and have a cold so not at my brightest but but but....

Isn't thatexactly what you got?!? You had a rate of 5%? I haven't done the maths (see the knocked up and poorly comment - normally I'd jump at the chance of doing some sums) but I'd have said that the 5% rate that you got roughly is the average over the last 30 years.

And what you did is the exact opposite of taking the money to a casino. You didn't gamble it. You knew exactly how much you would have at the end.

I think that the problem is that you keep seeing people wandering past, waving their casino winnings and saying "yahoo - red came up!" and you are thinking "but red is my favorite colour - I would have bet on red" but the fact remains that you didn't.

And had black come up and they been wandering past sobbing as they had lost their houses then you would have been able to close your door and be glad you didn't go to the casino.

Saski Wed 08-May-13 21:03:56

The insurance analogy is apt. The insurance payment is fixed (like your mortgage) - it's a swap for the variable/unknown (a flood - an increase in interest rates) is unknown. It fixes your costs. How many different ways are there to say this?

I'm going to say I doubt you were not advised.

Crikeyblimey Wed 08-May-13 21:05:00

We'd all be paying WAY over 5.something % if we had to pay the average of the last 30 years. My first mortgage was 13% and that was low for the time.

Mintyy Wed 08-May-13 21:05:00

Crikeyblimey

What if I had paid the £2,000 to switch years ago and the rates had stopped being so low and had gone back up again?

Why don't you understand?

YABU and essentially stamping your feet and saying 'but it's not FAIR' like a toddler. Buying a house is a gamble. If you're 50 I'd guess you bought your first house a fair while back and have done very nicely from house price rises. Lucky you.

Mintyy Wed 08-May-13 21:05:43

The insurance analogy is not apt.

Lonecatwithkitten Wed 08-May-13 21:06:54

I think it is very possible to gain the knowledge to be financially savvy about mortgages. Read the money sections in the weekend broadsheets, watch money type program's on TV learn about the difference between Libbor and Bank of England rate, read about how they analyse the economy and the rates what are key industries and how are they performing.
I have no specialist financial training just have done all of this and in September 2008 took a massive loan and a very educated guess that interest rates would fall and they plummeted. I have won massively as I took the time educate myself.

Bobyan Wed 08-May-13 21:07:22

So how much has your house value risen then?

Mintyy Wed 08-May-13 21:07:24

But yes of course I agree I am very much stamping my feet and saying it's not fair, like a toddler. That is exactly the point of my thread.

Mintyy Wed 08-May-13 21:08:10

Bobyan - what does the value of my house have to do with anything?

EverybodysStressyEyed Wed 08-May-13 21:08:26

well yes, 5% is pretty much the average of the last 30 years

how do they work out an average in 10 years time when they have enforced a fixed rate for 10 of those years?

Interest rates are like food prices - supply and demand will determine whether they go up and down. take out those market forces and say hello to a planned economy

ALso, it is the banks money....

Crikeyblimey Wed 08-May-13 21:09:29

But that's EXACTLY the fucking point Minty. Stop fucking moaning about having take. The safe but more expensive route and get over it.

We all keep an eye out to try and second guess when the rates naught start to go up again and then take the option to fix again.

What did you want - a free house? Or - you could ring them and ask them to continue your old fixed rate. At least you'd know where you stand.

I've lost patience now.

Bobyan Wed 08-May-13 21:10:16

Because you are moaning that having a fixed rate has cost you money, but if the value of your house has risen, it may well have made you money.

Mintyy Wed 08-May-13 21:10:30

I understand what you are saying but is it really helpful to compare food prices (or indeed insurance prices) to housing prices?

slhilly Wed 08-May-13 21:11:02

Mintyy, you seem to be rather missing the point. No-one can predict the future. No-one. Not you, for sure. But not the banks either. And not the government.

Say the government did what you said but did it for the future, ie set the bank rate that everyone was going to use for the next 30 years. If (if? when!) that rate diverged from the path of the UK's economy, every mortage payer would either be massively overpaying or massively underpaying. So either we or the entire financial system would be hugely out of pocket - the sort of scale to make the crash of 2007 look like a storm in a teacup.

You want a comfort that's not on offer.

In any event, the problem with housing in the UK is not primarily about mortgages, it's about house prices. A shortage of supply, lots of demand and subsidies that just reset the starting point. The financial system's dysfunction makes this problem worse, but for once it's not the root of the evil.

Bobyan Wed 08-May-13 21:11:48

You made the wrong choice. Suck it up.

HollyBerryBush Wed 08-May-13 21:13:10

I fixed at 5.something for 10 years.

I have no issue with this at all.

I also remember 20%+ mortgage rates.

I did look at changing to a 2.something % as I have 5 years left on that rate

To keep the same payments, I would drop 2 years, add 6K to the amount outstanding through penalty fees....and sadly I really CBA to fuck about with it all

>slate me<

Mintyy Wed 08-May-13 21:13:34

Bobyan - yes, I am very lucky that house prices have risen while I have been a home owner (since about 2000). I agree. However, I cannot afford to move from a 3 bed house to a 4 bed one, just incase you thought I spend my days off rolling around in thick carpets of £20 notes.

Saski Wed 08-May-13 21:14:16

How is the insurance policy comparison not apt?

Bowlersarm Wed 08-May-13 21:14:50

Mintyy-you need to stop stamping your feet toddleresque now. No one (hardly anyone) agrees with you.. It is what it is. That is the way mortgages work.

There is a choice with taking out a mortgage. You have to make the best one for your situation. No one else wants this choice taken away from them, which seems to be what you are saying.

Bobyan Wed 08-May-13 21:15:21

My heart bleeds.

EverybodysStressyEyed Wed 08-May-13 21:16:04

the economics work the same way

and they are all interlinked - farmers do exactly the same with commodity prices

I will sell my field of wheat in a years time and I want to make £X.

The bank will say to the farmer - we will guarantee you £X when you sell but you will have to pay us a fee (like interest). The bank price the fee according to how risky they think it is. The farmer makes a decision as to whether he thinks the fee is reasonable for the risk.

It is exactly the same with your fixed rate mortgage - the bank need to borrow money on the markets so that they can lend it to you. the price they are paying for that is the basis of the price they then charge you. they make their predictions based on the best info they have at the time. In 2007 there weren't many people predicting the financial crisis

Bearbehind Wed 08-May-13 21:16:08

mintyy between 1975 and 1991 interest rates were rarely in single figures. It is only on the last 4 years that they have been at historical lows so 30 averages wouldn't have helped.

It really is you that doesn't get it.

Shit happens, no one can predict the future. You make informed choices and live with the results.

How is it any different to choosing to fly in a plane that might crash and kill you or choosing to have a child that might have a serious illness. Given the choice of course you'd have a preference but you can't have a fucking choice so you just have to get on with it.

Bearbehind Wed 08-May-13 21:21:47

^^ Actually I mean you can't have a guarantee and you have to make a fucking choice!

Mintyy Wed 08-May-13 21:32:33

"Shit happens, no one can predict the future. You make informed choices and live with the results."

Informed choices? informed by what? informed by who? My choices weren't informed by anything, they were a guess at best and an opt for the easy option at worst.

This is my point.

Roffling at the plane crash analogy!

Mintyy Wed 08-May-13 21:33:44

Bobyan?

everlong Wed 08-May-13 21:36:55

We fixed in a panic for 3 years in 2008.

Paid thousands over what we would have if we had just left it on a variable.

It used to drive me a bit crazy when I sat and thought about it.

But as DH said there's no point in going on about it. It won't change it.

I'm a bit jealous of your £379 mortgage though!

Mintyy Wed 08-May-13 21:37:45

Aibu to say tough tits to all the people who have bought on 2.5% mortgages when they find themselves repossessed when the rates go up to 5%?

On our £180,000 that appears to be the difference between just under £400 per month to just over £800 per month?

I guess I am allowed to sit back and say "well you placed your bets" when that happens?

Bearbehind Wed 08-May-13 21:38:27

If that was the case it was your choice not to be informed, the information is out there but it's not guaranteed and no one could have predicted 5 years ago that rates would have been this low for 4 years ago. If they could've they'd be rolling in it now.

Why is my plane crash analogy funny?

Mintyy Wed 08-May-13 21:39:24

Because of the HUGE difference in risk!

Bearbehind Wed 08-May-13 21:40:24

TBH if your mortgage is still £180k and you had a mortgage when interest rates were 15% I'm guessing this isn't the first bad decision you've made.........

Bowlersarm Wed 08-May-13 21:41:19

Of course you would be reasonable to say that (although a little unkind) if those people couldn't afford the mortgage in the event of rates going up. 2.5% isn't a rate that will be around for ever. They will go up at some point. It would be naive to think otherwise.

MyDarlingYoni Wed 08-May-13 21:43:05

We also fixed for five years and could have gone variable for cheaper but I did not want to be obsessed with rates, checking every speech and up date by banks, reading everything I could all the time trying to predict what they would do. Which is what I was doing as last deal came to an end.

We got a decent fix, and to be honest -= the absolute peace of mind not worrying about it has been worth the slight over spend.

I would have been worried sick on a variable.

If we had more coming in and no DC we could have gambled and it not mattered so much but we had no wiggle room should they go up.

Informed choices? informed by what? informed by who? My choices weren't informed by anything, they were a guess at best and an opt for the easy option at worst.

Well that's your problem isn't it! I could understand your frustration a bit more if you said that you'd considered all your options, educated yourself, took advice and made the wrong choice. But you didn't bother and it cost you money. The financially savvy aren't like that by luck; they spend time doing research, they read stuff, they get advice and they make informed choices.

If you don't do those things, then yes, you're just gambling with your money. And if you don't like gambling then the sensible thing is to inform yourself and make real choices, not just guess or take the easy option.

Crikeyblimey Wed 08-May-13 21:45:05

Bear smile funny as the proverbial!

Yes - people take risks borrowing huge amounts (as much as they can possibly afford) when the rates are low. That is their choice and yes hey could come massively unstuck if rates rise sharply. That would be the ideal time to fix - when rates are on their way up.

OR - people could actually think about the risks, make a judgement call and maybe not borrow a shitload of money just to live somewhere naice or keep up with the Joneses.

Will you just enjoy the fucking fact that you now have some spare cash and also the knowledge that should rates go up, you'll still be able to afford your house.

Talkinpeace Wed 08-May-13 21:45:34

Mintyy
My aunt bought a £100,000 annuity to provide her with a regular income for the rest of her life.
She died 34 days later, before the first monthly payment was even made.
£100,000 down the drain.
That is the luck of the draw.

Re being informed, you had access to as much information, whether you sought it or not, about which way rates might move as anyone, including the banks. No one can predict the future, hence the choice of fixing (insuring, as has been pointed out) your payments, or not.

Bearbehind Wed 08-May-13 21:47:51

I give up too.

As someone very rightly said earlier, this must be the blame culture at its best.

If you can't be arsed to research such a big decision then you deserve all you get.

Even if you had researched it or, as you wanted, if you'd been told what do, the outcome would probably be the same.

What good is letting it annoy you doing anyway?

Mimishimi Wed 08-May-13 21:55:34

YABU. My parents somehow managed to secure a loan which was fixed for the term of the loan at 5%. At the time they took it out, rates were a couple of percentage points lower - they got alittle bit of light-hearted flack for it. Then the big 1980s recession hit and interest rates went up to 17-18%. We knew a fair number of families who had been taking advantage of the low interest rates to buy cars etc and they were so loaded up with debt, they got wiped out and had to sell.

Mintyy Wed 08-May-13 21:59:06

Bearbehind
I realise you might have left the thread now but, if you have not (or if anyone else is intersted in chipping in) then I am interested in what sort of research you think I as an ordinary punter could have/should have done prior to making my decision.

Talkinpeace Wed 08-May-13 22:01:35

Mintyy
there is NO research that could be done.
If there was, Madoff would not have scammed thousands of professional investors.
Only Marty McFly can truly know the answer.

But the general point is, if you do not understand how a financial product works, choose a simpler one till you DO understand what you are buying.

Mimishimi Wed 08-May-13 22:02:15

And my parents were able to pay back that loan in fourteen years... they could make extra payments into it. Dad said that the bank they borrowed through were offering it as a month long special ( they had just changed from a credit union to a bank with a new mortgage division) and he hasn't seen the like again. YANBU to think that interest money is 'dead' money though ... something which always baffles me when people with absolutely enormous mortgages come out with that line about paying rent.

But interest isn't necessarily dead money Mimi, you are presumably buying a property (or any asset) that you hope/believe will be worth more than you paid for it, interest included, at the end of the loan term. But we probably shouldn't even start on the gamble that is a house purchase...I notice Mintyy isn't complaining about her outcome on that one hmm

Of course you can do research! When the banks set their mortgage rates they don't just pluck a figure out of thin air, so you have to do your best to understand how the rates on offer have been set. You can do some basic research on monetary economics, understand how interest rates work and how central banks manipulate them to influence inflation and economic output; you read the finanical columns of newspapers; you speak to financial advisors.

Yes, it is impossible to know what will happen in the future, but that doesn't mean you should just throw your hands in the air and pick the first mortgage you're offered, in the same way that you shop around for any product if you care about how you spend your money.

Mintyy Wed 08-May-13 22:17:16

Talkingpeace
You are a mumsnetter I know and trust. What do you recommend I do with my mortgage now?

Mimishimi Wed 08-May-13 22:18:11

That's true but when my parents were borrowing, it was approximately three times just my Dad's yearly income. That was average. The multiples are so much higher now - eight to ten times yearly combined income assuming both people are working fulltime on at least a professional's starting wage. That's the average now and some are borrowing even greater amounts. The amounts that they are borrowing might mean that the value of their property will not exceed the interest payments that they have made whilst they are still living. It's very scary how little 'wriggle' room many have... That said, noone's holding a gun to their head forcing them to take out that kind of money so maybe people are just less financially literate about what interest really means.

Crikeyblimey Wed 08-May-13 22:23:03

I know you've not asked for my advice but I suggest you get familiar with Moneysaving expert. Then over pay as much as you can to chunk down the capital you owe. Keep an eye on rates and fix again as they start to rise.

That's what we are doing (well, except for the overpaying as we could pay ours off with savings right now but can get a higher rate on the money in a savings account than the current mortgage interest rate - so we are overpaying into our savings to make more money).

TheDoctrineOfSnatch Wed 08-May-13 22:33:46

Mintyy, do you think the banks knew? Because they didn't. That government knew? Because it didn't.

We are on a longer fix than you at something not too much below the rate you've just come off. We looked at historic interest rate trends and decided we'd rather risk paying more than the odds than having unaffordable payments if interest rates hit 8-9%. Yes, we'd've been better doing 1-2 year fixes, financially. But we made the decision for peace of mind and would make a similar one again in similar circs. For us, the baby making years have been stressful so it's worked on a personal level not to have to faff every year or so with research, loan to value assessments etc etc. I'm happy it was an informed decision with lots of good points although not the best financial outcome. And the product had other features eg interest holidays that we have used too, our building society is easy to deal with etc.

Mintyy Wed 08-May-13 22:34:04

How nice for you crikeyblimey. I do hope things don't go unexpectedly against you.

Mintyy Wed 08-May-13 22:36:45

Anywayup, I have started a nice new thread in chat and all the mumsnet experts can advise me on what to do with my finances from now on. Being as how there are so many people on here who know exactly what they are doing and all.

ivykaty44 Wed 08-May-13 22:37:49

minty do you have insurance for house contents or building insurance? Is this not the same, these companies take money each year or month but you possibly go for years paying in thousands and not claim from them, it is similar to gambling.

As for our mortgage I would continue to pay the £800 per month instead of the £379 as it will save you a considerable amount of money on the rest of the term of your mortgage. But check your policy with the lender to make sure you can make over payments and when and how you can do this as each lender may vary and each policy may vary.

There are calculators that can show how much money you can save by over paying

Most people would be celebrating at finding out that they've got an extra 400 quid a month to play with. Instead you're moaning at how unfair life is and making sarcastic comments at someone who's taken the time to give you helpful advice. You really need to get a grip.

Mintyy Wed 08-May-13 22:41:06

Which helpful advice is that MrsMinivers? I think I may have skimmed past it.

Mintyy what bit of this aren't you getting? Things didn't go "unexpectedly" against you, they just went against you (particularly as it was "at best a guess" for you). Could just as easily have gone the other way, that is the whole point of fixing the rate! You wanted, like Doctrine, to eliminate the risk of your payments rising and were prepared to take the risk of paying more than you would if on a variable rate, that is just the way it went, no one forced you to fix or deliberately ripped you off!

Mintyy Wed 08-May-13 22:42:46

And, as I said, I am very much a glass half full type of person.

Its just the £20,000 - £30,000 discrepancy in this particular instance that leaves me feeling uncharacteristically negative sad.

AnyFucker Wed 08-May-13 22:43:29

Mintyy, you must have some serious doldrums this evening

You have had good advice on this thread

< slaps Mintyy gently round the chops and forcefeeds her wine >

everlong Wed 08-May-13 22:44:35

Surely mintyy was just having a rant? I think she's entitled to tbf.

Mintyy Wed 08-May-13 22:45:13

Which bit of this are you not getting?

When I decided to get a mortgage I didn't want to be involved in a "things going against me" or "things going for me" guessing game. And why on earth would I?

Mintyy Wed 08-May-13 22:46:07

<goes back through thread to find good advice>

ivykaty44 Wed 08-May-13 22:46:47

it is about 22 thousands pounds and I would feel like ranting if I had spent an extra 22 grand and would want to kick myself for taking that particular option.

Mintyy Wed 08-May-13 22:47:32

ty katy

AnyFucker Wed 08-May-13 22:48:04

Let it go. Thousands of people are in the same boat. That money you think you have "lost" was never real to you.

Carry on overpaying your mortgage up to the limit the mortgage company will allow.

^^ good advice. It's all there in the thread too.

Bobyan Wed 08-May-13 22:48:43

I love you anyfucker!

Ahhhcrap Wed 08-May-13 22:49:23

Yabu yes, you did take a punt on your mortgage by signing up for a fixed rate. It could have gone up too and that's what you pay for.

I presume you could have bought yourself out if the fixed rate if you'd have wanted to?

AnyFucker Wed 08-May-13 22:49:56

I never added up how much we "lost" when we were stuck in a fixed rate that was distinctly disadvantageous

I knew it would do me no good at all. The moneyb was never mine. As soon as i signed that form, it belonged to the mortgage company

Look ahead to the future. The feeling of making your last ever mortgage payment is very sweet indeed.

TheDoctrineOfSnatch Wed 08-May-13 22:50:26

A rant is fine, but the actual AIBU question to which people are responding is about "punts" on mortgage rates.

If the AIBU was "ah, what could I have done with that £ if I'd chosen differently" then there'd've been a different response.

AnyFucker Wed 08-May-13 22:50:48

Why, Bob, you don't even know me < coy > smile

Because - forget the house - you were borrowing money over a very long period and interest rates move up and down over time, so the interest rate was always going to move. You take the pain/benefit of the up/down on a variable rate, or you fix the rate so you know exactly what you will be paying, then take the pain/benefit the other way, with the comfort of knowing that if the rate went up, you were limiting your exposure at 5%. If you don't like either option, don't borrow the cash!

ivykaty44 Wed 08-May-13 22:51:23

actually I would be gutted sad

i had a fixed rate mortgage at 8% and was lucky as only over paid for about the last 6 months and then got out of it about 6 months early due to BS clerical error. The rate had gone down to around 6.5% but I had had 4 good years paying less and had had four years fixed before that paying 4% when rates were around 10% so I had done well.

I think though buying property like buying shares in a company is similar to gambling as prices can go up or down and it is risky

FunnysInLaJardin Wed 08-May-13 22:51:57

sure this has been said, but why didn't you swap to a tracker? We did 4 years ago and have saved over and over the £15k penalty

Technotropic Wed 08-May-13 22:57:07

Mintyy

I think you are asking the impossible. Nothing can forward predict whether something will go for or against you. Certainly not for 25 years anyway. If you want 100% certainty then do not take out a mortgage.

The only solution to your problem, and to escape all the interest woes, is simply to save up all the money yourself and then buy once you have saved up the right amount. I'm not taking the mick but its the only way to escape the frustration you're experiencing.

Mintyy Wed 08-May-13 22:58:54

Anyfucker
I thanked you for your thoughts right back at the beginning of the thread. I know you are right and I will let it go.

Dh understands me (a rare thing) totally "we might just as well have taken that money to a casino". All I wanted was for a few Mumsnetters to get a feeling for my point and I am grateful that they did.

OrWellyAnn Wed 08-May-13 23:02:23

Yabu. If you want to buy a house these are the constraints, they may not seem fair to you, but you knew the risks when you went in and that particular gamble didn't pay off. You don't like the system then don't buy a house. This is just one of the reasons I am happy to be a renter. Everyone bangs on about the price of houses, but you add the interest to most house prices, assuming 10 or 20% deposit and you are paying at LEAST half as much again...unless you can afford to overpay, which most people can't, because they have bought close to the limits of what they can afford...

Honestly, if people hadn't gone so crazy about house ownership in the last couple of decades a heck of a lot of them would be significantly richer, or signicifantly poorer, depending on when they bought. Of COURSE your mortgage rate is a gamble, so is the whole house ownership game, no more stable than shares or betting!!

Kewcumber Wed 08-May-13 23:02:55

Fixed rate mortgages didn't exist at one time (or were as scarce as hens teeth). They were brought in by popular demand because people didn't want to worry about mortgage rates going up and becoming unaffordable. I suspect it all happened when people started taking out mortgages at the absolute maximum of what they could afford.

The mortgage companies go out into the market and buy money at a fixed rate as well and sell that at a margin as fixed rate mortgages - they haven't made off like a bandit with your extra £22k.

I can see it would be immensely annoying but interest rates are relatively stable these days so you either pick a fixed rate which seems pretty close to variable rate and enjoy the certainty - or chose a rate with no redemption penalty and rate surf every few years (though with charges this can work out just as expensive an option).

FIxed rates are NOT a gamble - they are the opposite - they are absolute certainty of your largest cost - and you have to pay for that, generally a couple of points above the variable rate.

Mintyy Wed 08-May-13 23:05:46

But why does it have to be a gamble? Why can't it be a straightforward transaction where you know what you are paying ... as in when you buy a loaf of bread, or your house insurance, or a car?

Would people be just as sanguine if they found out they had been overpaying their rent by £500 per month for 5 years?

tallulah Wed 08-May-13 23:06:08

If it's any consolation we did the same many years ago and fixed at almost 8% when the rate then went down to 4ish.

EverybodysStressyEyed Wed 08-May-13 23:06:17

you borrowed money and had to pay for that

you could have taken that money that you borrowed to a casino and won more or lost the lot

or you could have invested the money you borrowed into a house in the hope that the value of that property went up.

who do you think is sitting with the £20-30k?

You can't live in stocks and shares though Orwelly...if your house drops in value at least you can use it while you wait for it to rise again smile, admittedly the problem, of course, comes if you can't keep up repayments and are in negative equity...

TheDoctrineOfSnatch Wed 08-May-13 23:08:56

Mintyy, if you wanted to buy home insurance now to cover the next 30 years, you would pay a different total premium to someone who renewed every year.

Viviennemary Wed 08-May-13 23:09:37

It is annoying. We were on a fixed rate for five years but only paid over for a short while. But on the other hand if Building Societies think the rates will go up they won't be offering long deals at low rates. So I think beware of those offers.

I hate to wade in here, as you've had lots of good advice ^.
But youre old enough (by your own admission, I'm not stalking you) to remember when fixed rate was a new thing. The banks didn't offer it before. It was explained to us what this new thing meant in the 90's.
I've had standard rate, variable rate, fixed rate. And switched as appropriate.
I pay someone to give me advice. I evaluate that advice and take responsibility for my decisions.
Same as any other purchase.

But you seem to be in the position to overpay your mortgage and take years off it. If your glass is half full, look at it like that.

CherylTrole Wed 08-May-13 23:10:01

Mintyy just wanted to say I totally get where you are coming from!
Mortgages give me the shits grin No words of wisdom for you, but I am counting my blessings mortgage wise and am aware that my situation is not perfect, but it could be a hell of a lot worse. Chin up love!

Crikeyblimey Wed 08-May-13 23:10:44

I like to think I have good advice up there but I appear to have been being smug. I'm not smug. We have a small mortgage because we live in an ordinary house that we could afford and have been laying this 15 year mortgage off for 10 years. It could go tits up (thanks for that) but if it does, providing our savings don't go up in smoke - we will pay it off. Oh and a cheap shot, I know but you've infuriated me - to have enough savings to do this, we not only have been frugal but my mother had to die sad

Frankly, I should just give up because all you want to hear Mintyy is that you were robbed blind and nobody seems to care..

Mintyy, you did know what you were paying, for five years at least.

No one could tell you with certainty today how much a car or a loaf of bread will cost in ten or fifteen years, same with the cost of money (interest). The movement in price is because of the time period involved.

TheDoctrineOfSnatch Wed 08-May-13 23:12:51

It's like if you wanted to guarantee a petrol supply for 10 years - the price you pay would be different to the price you'd pay tomorrow at the pump.

Something you buy over a long period (in this case, money) doesn't have a defined price in the way a loaf of bread you buy tomorrow does - because the parties are trying to price in the risks associated with that product (money) over time. When you buy an item like bread, there's no time variable to be considered.

TheDoctrineOfSnatch Wed 08-May-13 23:13:54

X-post sleep!

FunnysInLaJardin Wed 08-May-13 23:13:59

the thing is Mintyy that most folk with a mortgage kept an eye on interest rates and when they went down they adjusted accordingly. It is shit but tbh if you had thought about it you could have taken advantage from the lower rates.

We spent £15k shifting from a 6% fixed to a tracker 4 years ago. We took a gamble and it paid off for once. We were paying £36k pa on our mortgage and for the last 4 years we have been paying £24k pa. So due to our gamble we have saved £48k shock. Although we did pay £15k to get out of our fixed rate, so a net save of £33k pa

Technotropic Wed 08-May-13 23:14:06

OP

All things have a fixed price. If you bought your house today it would cost you £180k and not a penny more. The same goes for your car or a loaf of bread.

The issue here is how much you should be paying for the privilege of borrowing money you don't have. You see it as a gamble but in reality I think it's more of a gamble for the bank to assume that we are all going to be gainfully employed for 25 years non stop. During the recession and previous ones, banks have probably lost money due to repos.

FunnysInLaJardin Wed 08-May-13 23:14:15

sorry £33k overall

OrWellyAnn Wed 08-May-13 23:21:34

Well no, but at least if the value of your stocks and shares crash you don't have to lose the house over your head to pay back the bank because you can't get the value you paid for them. Generally people wouldn't push themselves to the absolute limit to own stocks and shares the way they have to own bricks and mortar, and yet they are both subject to Market forces and both vulnerable to crashing. In fact a mortgage has the added vulnerability of interest rate changes....

Mintyy Wed 08-May-13 23:23:44

I'm sorry I've infuriated you, but really, what has your mother dying got to do with any of this? I am sorry for your loss and I fully understand that the loss of a parent totally overshadows my petty worries (having suffered same not so long ago) but really I can't grasp your point.

I am not whingeing about being poor.

I am not whingeing about the value of my house.

I am saying that it is wrong to ask everyday (even reasonably well educated people like me and dh) to take a punt on what interest rates are going to do when they take out a mortgage.

Is all.

Mintyy Wed 08-May-13 23:26:39

Funnys
Thank you for your post abut as you may have ascertained I am not interested in taking gambles on things as big as my mortgage. I just don't want to be ripped off, tis all! I think the banks should offer a product where people are paying a fair price and the right price for the length of the loan.

DamnBamboo Wed 08-May-13 23:27:19

Have read to end of p5.
OP,you clearly don't understand mortgages, how they work, are calculated, on what basis etc.

I can't believe you are moaning about this.

You have no business signing contracts, of any kind... you really don't.

sydlexic Wed 08-May-13 23:27:19

If interest rates where higher your mortgage could now be going up. The worst that could happen if you had a fixed rate was paying more than necessary, the worst that could happen if you had a variable rate is repossession.

Try to look on the bright side, your payments are reducing, if you overpay you will save what you have lost and more.

Saddayinspring2 Wed 08-May-13 23:29:45

If you hadn't wanted to take a punt, you wold go with the variable rate.. Ie take it as you find it. By choosing fixed rate it was , presumably, a calculated gamble on your behalf to avoid a severe rise in the rate.
You achieved that but sadly the variable rate became much lower... Presumably it was higher when you initially took out the mortgage so must have only lost out for part of the time.
The reason I would never take out a fixed rate again is because you have tie in clauses that are a pain.
Pay off as much as you can afford now while IR are low as this reduces the overall amt paid back and term as well.

DamnBamboo Wed 08-May-13 23:29:56

Thank you for your post abut as you may have ascertained I am not interested in taking gambles on things as big as my mortgage. I just don't want to be ripped off, tis all! I think the banks should offer a product where people are paying a fair price and the right price for the length of the loan.

Laughs loudly! Actually guffaws at this.

You want to be financed in the way that suits you, for the length of a loan, in some cases 25 years and want it decided up front

grin gringrin

OrWellyAnn Wed 08-May-13 23:30:33

Housing is a very emotive issue, because we are talking about people's homes, a place where they have memories and feel safe because they have no landlord to take the house out from under them. But unless you have paid off your mortgage then the banks ARE your landlor, and you dont even get the added bonus of having your house maintainance ocevred by someone else.
The dangers of home ownership are no less than any other investment, and one that pays off very nicely for those in the right place at the right time, but for equal amounts of others it doesn't. It is our (relatively understandable) human inability to see them as an investment that has led so many people to take, frankly, irrational risks. (and I'm not talking about the op here, but people who have bought at ANY cost to themselves and their lifestyles just to get on the ladder and are now facing the very real issue of not being able to pay back capital on interest only mortgages)
I really do feel for the people out there for whom the shit is about to hit the fan, but i also feel that this was part of the risk for them and if you take a willing risk then you have to be stoical about accepting any of it's potential outcomes. (Just as never owning my own place because I can't GET a mortgage because my small 'deposit' savings are going nowhere with shit interest rates was a possible risk for me. I don't like it, but i do accept it was my choice and suck it up.)

Mintyy Wed 08-May-13 23:30:57

Damnbamboo
Please can you explain to me then? (seriously). We have to decide what to do now. I would love some financial advice that I can rely on. Feel free to pm me if you would rather not advise on the boards. I will keep anything you say private.

Bobyan Wed 08-May-13 23:30:57

Nope, your just whingeing.

For the hundredth time, you didn't take a punt. You chose (you, nobody else) to buy a mortgage at a set rate. You pay extra interest for this opportunity. You knew this when you signed up for the mortgage, because if you claim not to have known this, why fix?

Talkinpeace Wed 08-May-13 23:31:29

mintyy
They would if they could - because whoever did so would clean up
but how do you define "fair price" over the lifetime of a mortgage.

Here is one of the best educated guesses about what interest dates will do in the future.
Digest.
www.dmo.gov.uk/reportView.aspx?rptCode=D9A&rptName=42d7fc40-ef66-48a9-b861-9e9c5a4d7639||PWLB&reportpage=Lending

<bashes head on keyboard>

I honestly can't think of anything to say that hasn't been said already Mintyy - but will try this again...nobody can see into the future, be they a witch, a banker or man in the street. We can only make a reasonable guess. If you want to pay for borrowing over 20+ years then you have to take a punt one way or another, it's not wrong or unfair on anyone in particular, just the way it is and there aren't any real alternatives.

Talkinpeace Wed 08-May-13 23:32:43

PS Mintyy : I've invited you to message me but I'm going to go to bed and read the Economist in a minute.

Bobyan Wed 08-May-13 23:33:46

Will you be blaming Damnbamboo if her advice doesn't give you the financial outcome you want?

DamnBamboo Wed 08-May-13 23:34:14

mintyy I ain't got anyting for you, other than basic research and short to mid-term loans can offer.

Nobody does, unless you're so wealthy you don't really need mortgage.

FWIW, I also lost about a lot of money on a fixed rate/tracker. I went 50/50 fixed/tracker and rates dropped.

I kick myself, but I made the choice

EverybodysStressyEyed Wed 08-May-13 23:35:02

you did pay the right price for the loan based on the information and facts at the time you took out the loan!

Mintyy Wed 08-May-13 23:35:17

"You knew this when you signed up for the mortgage, because if you claim not to have known this, why fix?

Because why not fix?

Because I did not know what interest rates were going to do so I closed my eyes and stuck a pin in the map!

But I don't think that is the way people should buy their mortgages!

(how hard is it to understand?)

Mintyy Wed 08-May-13 23:36:17

DamnBamboo

When you say "I kick myself" - why should you?

DamnBamboo Wed 08-May-13 23:36:38

Mintyy YABVVVVVVU

Go to bed.

Accept that if you mortgage and look at it purely in plus/minus terms of your bank balance - you may not often win.

The info you want is that which will make us all vvvvvvv rich.

Let me know when you've worked it out.

Bobyan Wed 08-May-13 23:36:54

And whose fault is that?

(How hard is THAT to understand?)

DamnBamboo Wed 08-May-13 23:37:43

Because i took a punt.

50 fixed - it could have gone up it, but it didn't.

50 tracker - it could have gone down, it did.

I lost more than I gained, but there you go!

EverybodysStressyEyed Wed 08-May-13 23:40:44

no - that isn't the way people should buy mortgages

if you need to rely on guesswork then you really should go and get some independent financial advice. there are plenty out there and those who specialise in self employed

do you go into the 2nd hand car dealership, close your eyes and point and then complain how unlucky you were to get the car that won't even pass its MOT? Do you go into the supermarket and just pick the first 6 apples out of the crate and then bitch that 3 of them were bad?

Only you can make these decisions and you need to educate yourself or get some advice that you can then base your decision on

DamnBamboo Wed 08-May-13 23:41:31

*DamnBamboo

When you say "I kick myself" - why should you?*

Who else should?

I TOOK OUT THE LOAN, IT WAS DOWN TO ME. IF YOU DON'T UNDERSTAND THE LOAN YOU TOOK OUT THEN YOU DON'T SIGN. WHAT IS SO HARD ABOUT THAT?

Sorry, but 10 pages on, a little shouting needs to be done.

Mintyy Wed 08-May-13 23:41:49

Heh heh Talky, ty, I may well speak to you tomorrow.

To everyone else who strangely (weirdly?) seems to have become infuriated with me for being annoyed about an economic system (NOT you, or my friends, or mil, or family, or any mumsnetter, or any rl actual person) I wish you a happy and peaceful goodnight.

DamnBamboo Wed 08-May-13 23:45:24

YOU ARE BEING OBSTINATELY OBTUSE MINTYY.

IT ISN'T THAT HARD TO UNDERSTAND.

DamnBamboo Wed 08-May-13 23:45:52

sorry for caps, keyboard stuck grin

andubelievedthat Wed 08-May-13 23:48:26

Your "sticking a pin " actually, that"s what most people do ,not literally but yes ,take a guess, cos as said by others ,if anyone knew for sure ,they would be a zillionaire, and no matter how its dressed up ,it will always be a punt ,can"t stand the heat?.......bitch on mn, because that's all you got,same as everyone.

FunnysInLaJardin Wed 08-May-13 23:48:34

then Mintyy you need to see your rate as the right price. The price you could afford to pay for your loan and close your eyes and ears to what other folk got and what might have been. You could afford it, you kept your house, so all is well. It's not fair that others got a cheaper loan, but really that is life and banking is a business like any other.

I have recently been stung by my bank btw so don't think I love them or owt, just that banks are shite, but so is life!

LaLaGabby Wed 08-May-13 23:54:27

How do you think I feel. I got pet insurance for a lot of money and then my cat never got ill. I just worked out that if I hadn't taken out any insurance I would have saved all the money. The insurance company forced me to gamble on my cat's life! WTF? AIBU?

LaLaGabby Thu 09-May-13 00:00:58

The other day I was going somewhere on the bus, so I bought a bus ticket. Do you want a bus pass he said. No I said as I wasn't going anywhere else by bus that day. Turned out I had to go somewhere by bus later that day so I lost money?

Is it really fair that ordinary people should be forced to gamble on bus tickets like this? All I want is to go somewhere by bus when I want to, not have to place expensive bets on my activities later that day! AIBU?

Mimishimi Thu 09-May-13 00:05:37

WhenI was a child, the cost of a loaf of freshly baked bread (not the preservative laden stuff that sits on the shelf for a week) was the equivalent of 35p. Now it is about £2.75. I didn't sign up for taking a punt on my grocery bills when I was born. It is what it is. You yourself said that variable rates were higher when you took out the loan. Have they been 2.75% the whole time?

LaLaGabby Thu 09-May-13 00:09:57

The other day I bought a half pint of lager in a pub. Then I wanted some more so I bought another half, costing me 10p more than if I originally bought a pint. However I prefer to hold the smaller glasses so I was able to get over it.

Is it too much to ask that pubs simply serve the drinks you want, that the price isn't set until after you've finished drinking the total amount, and that they simply charge exactly what the beer cost them, plus a fair profit, say 5%? And if anyone in that or any other pub got a better deal than you did, that price would retroactively apply to you, so you didn't have to take a gamble on which pubs are the cheapest?

LaLaGabby Thu 09-May-13 00:12:36

Also, who wants to drink in the cheapest pub in the area? I've only been there once, and I was with my mum, and they gave her a tiny little mixer orange juice in a big glass with no ice. I would much rather go to the Railway Tavern, but with the reassurance that I wasn't paying any more than I would elsewhere.

LaLaGabby Thu 09-May-13 00:14:05

Then I had to be like 'Don't worry, this pub is not a reflection on the area I choose to live in.' so that my Mum wouldn't judge me. At the time I was new and so I didn't know about the other pub.

I like my street. Why should I care if my mum judges me?

LaLaGabby Thu 09-May-13 00:16:50

I actually had to order a pint of Stella, and drink it, only to express my disdain for the orange juice.

Also my DH went in their to use the loo once and ended up getting shouted at by the landlord, and buying a Coke and leaving it on the bar.

LaLaGabby Thu 09-May-13 00:17:24

Is it wrong to want to have a quiet drink somewhere that doesn't have an in-house dog?

Mimishimi Thu 09-May-13 00:20:56

And LaLa goes off on a tangent .... or few grin

Viviennemary Thu 09-May-13 00:36:20

I do get your point Minty. And I think the Banks and Building Societies have been a bit devious in those offers. I think those fixed rates were meant to be attractive to people who were worried that rates might go up but instead they crashed. So people lost out.

And what about people who lost out over endowment mortgages. They lost money. Finance is a gamble. And a lot of people are suffering because of very low interest rates on their savings.

LaLaGabby Thu 09-May-13 00:38:33

DH said he was going to spit in the Coke before leaving it but he realized that no-one who was sitting at or working behind the bar was remotely interested in drinking it.

OccamsRaiser Thu 09-May-13 03:50:03

Lots of advice on here about why someone would take out a fixed rate loan (certainty of repayments) vs 'gambling' on the variable rate.

I guess one way to think about it is to ask yourself why the fixed rate for a loan is almost always higher than the variable. It's the premium that you pay for knowing what your repayments will be. If you're sailing close to the wind in terms of affordability, you might well pay a bit more to fix your home loan so that there are no unpleasant surprises if the rates go up.

It's like people think that it's easier to pay the money to prevent a worse outcome (i.e. inability to pay mortgage/loss of house)

Like some others, I've had various mortgages in the past. Probably the best situation for me was having 75% fixed and 25% 'line of credit', which is what I did back in 2001 with my first mortgage. I had the option of knowing that I wasn't going to get wiped out if rates did increase (though sadly not benefiting if they decreased... which they did for a while, similar to your situation) but I could put all my savings, + salary (+ my husband's) into the line of credit facility, which meant that it ended up being fuck-all in interest, with the security of being able to access the money instantly. Can't figure out how I was wiser at 21 than I am now, but there we are ;-)

Tortoiseontheeggshell Thu 09-May-13 04:24:35

Mintyy, I do understand what you're talking about. The decision whether to fix a rat or to stay variable is a gamble, and it's one with a million variables, and it is unreasonable that the biggest purchase of one's life involves a 'guess' that can have such huge financial ramifications.

I actually don't understand all the people who are saying "you should have educated yourself more" because it's fairly common ground that very few people, including specialists, predicted that rates would stay this low, for this long.

HOWEVER. And this is what a lot of people are explaining and you are not getting. The current rate is not set by the banks, or the government, in an economic vaccuum. There is NO WAY for anyone to know what rates will be in five years, because it will depend on the global economy. The banks aren't keeping a secret from you. In order for them to function, their rates need to reflect the appropriate economic situation. Which they cannot predict.

So they CANNOT fix it. It sucks that you effectively have to gamble, but you have to gamble because by its very nature the "cost" of borrowing money is unknown. By everyone. It is impossible to fix a price.

TheDoctrineOfSnatch Thu 09-May-13 06:11:47

Good post, tortoise,

Tortoiseontheeggshell Thu 09-May-13 06:13:12

Thank you! I was particularly proud of my reference to repairing rodents.

coraltoes Thu 09-May-13 06:15:04

Floating rates better as there is risk attached, do it if you can afford the risk. Fix at a premium if you can't. Quite simple and not a punt a question of risk affordability.

Fwiw I once had a mortgage that was half fixed half floating...

OccamsRaiser Thu 09-May-13 06:46:02

Tortoise grin You go ahead and mend all the rodents then.

Seriously, good post about why 'one rate to catch them all' can't work.

Bimbledorf Thu 09-May-13 06:56:39

We are finally coming off our disgusting rate of 6.22% this year so I do share some frustration. However, I agreed to a 3 year fixed rate 5 years ago, stating categorically that I didn't want to pay that rate for more than 3 years and was prepared to take a risk on it at the end of the term. What has actually made me angry was the fact that when the mortgage offer came through it was fixed for 5 years with a 4000 penalty but if we rejected it we would have lost our dream house as we needed the offer then and there. We also paid 1000 for the fabulous deal. So, I took it on the chin for the first 3 years as I wholeheartedly accepted the point of the fixed rate as frustrating as it was, but the last 2 years I frequently curse the broker who clearly got a slightly bigger bonus because we went on the rate for 5 years and curse me for not pursuing it with the Fsa at the time.

When this mortgage comes to an end this year I will however fix again as it is only at 2% for5 years, even if rates stay low, THAT is a wholly acceptable rate and I love that I can fix it.

Mimishimi Thu 09-May-13 07:04:27

Occams, that's what we had as well except they call it an offset account here. The only difference is that we could put any amount of money in ( like a regular savings account) except that instead of receiving interest for the savings, that would go towards the interest on the mortgage. We piled every penny into that account because the more you had on it, the less interest you'd pay. The bank makes money from it by hopefully (from their perspective) making a greater percentage on the spread. We bought a unit so didn't have a huge mortgage but it would have taken a lot longer to pay it off without that account ( we estimated about double the time and we would have paid a lot more).

ivykaty44 Thu 09-May-13 07:48:22

I am saying that it is wrong to ask everyday (even reasonably well educated people like me and dh) to take a punt on what interest rates are going to do when they take out a mortgage.

thats the bit that you have round the wrong way minty, no one asked you to take a punt - YOu choose to take on a fixed rate rather than a variable rate

Bearbehind Thu 09-May-13 07:50:16

I can't actually believe, after 10 pages of people explaining this to you you still say things like 'I think the banks should offer a product where people are paying a fair price and the right price for the length of the loan'

That is exactly what happended when you fixed for 5 years at 5%, you got a fair price based on the future predictions and duration of your loan.

What I find far more interesting is that somethings don't add up with the figures in your posts.

You say you are over paying yet £379 per month at 2.5% on a £180,000 loan is interest only so any additional payments are not so much over paying as making a small dent in your capital repayment, which if you only make the minimum payments, you are not even touching.

If this is the case you really need professional, independent financial advice as you don't seem to have a clue what you've signed up to.

Asking random people on an Internet forum for advice because you 'like' them is even more bonkers than taking out a mortgage without any information.

Bearbehind Thu 09-May-13 08:09:50

Something that might make you feel better is that there are very few banks who's standard variable rate is 2.5% as it is only 2% over base.

Most svr's are 4%+ and those banks who used to have clauses which said their svr would never be more than 2% above base have removed these clauses in recent years so if you hadn't taken your loan out 5 years ago, it's likely your svr would now be much closer to the 5% you were previously paying.

It just goes to prove you win some and you lose some. No one can predict the future and you have to make an informed decision and be prepared for the outcome.

DolomitesDonkey Thu 09-May-13 08:12:06

Hang on, what the FUCK Are you playing at? You reckon you overpaid 400x12x5 and the CHOICE to re-mortgage would've been 2000?

Do you see any difference in those figures? Once again, you had a choice - in fact you had a choice each and every day for 5 years but you chose to stick your head in the sand and whine now.

MrsHiddleston Thu 09-May-13 08:12:26

What bearbehind said!!!

DolomitesDonkey Thu 09-May-13 08:13:33

To answer your original question to me, YES, we all take a gamble with our choice of repayment.

For example, I chose a 7 year fix because I don't believe interest rates will remain low - and, because I am risk-adverse - I want to know how much I am paying each and every month for 7 years. I have the option to re-mortgage if I wish to do so - although as you know now this costs!

FasterStronger Thu 09-May-13 08:20:08

a fixed rate mortgage is like insurance: most the time you pay out for it and get nothing in return.

but in the event of rates rising you benefit. if they don't you don't.

if you want the cheapest mortgage most of the time, got for variable rate, but only if you can afford for rates to rise.

if you cannot afford a realistic rates rise, you pay for the limiting factor of a fixed rate mortgage.

We're coming off a fixed rate next month and going on to another. We will save £200 over what we've been paying which is very nice. However we don't fix to save money. We've fixed for almost all of our mortgage term because we have three dcs and we want to know what our payments are. Children of the 80s as we are we don't want to run the risk of rates rising. Anybody who fixes thinking it will save money is deluded. Of course housebuyers take a punt. That's because the money market is fluid.

I really don't see why the OP is complaining.

sweetmelissa Thu 09-May-13 08:31:06

My suggestion would be to overpay and you'll be amazed how much quicker you will pay your mortgage off.

This happened to me, I continued to pay at the old higher rate and paid my mortgage off in 17 years as opposed to 25.

Khaleese Thu 09-May-13 08:35:32

You played the odds and lost...you might have won...

The best thing that you can do now is still pay the higher amount. You will be clearing the debt super fast at the cheapest you will ever be able to.

It's a good opportunity.

Khaleese Thu 09-May-13 08:36:31

Oh cross post sweet.
We knocked 15 year off doing this.

MummytoKatie Thu 09-May-13 09:38:47

Ok - going to explain this one more time before I give up and sit in the corner and sob!

If you go to a bookies with £1000 you can either bet on the 4:15 from Chepstow or you can decide that actually you would rather not. Getting a fixed rate is not a gamble - it is the equivalent of deciding not to gamble. You know exactly what your mortgage payments a going to be for the next 5 years and it doesn't matter what the money markets do or don't do - you are safe.

Now - as it happens the guy standing next to you had a hot tip and put his £1000 on some no-hoper at 20:1. Which promptly went and won. Chappy is now down the travel agents booking his holiday to the Maldives.

And you are moaning on mumsnet about how unfair it is that you didn't win the £20k. And that you don't think it is right that someone like you who knows nothing about horses has to choose whether or not to bet on the 4:15 from Chepstow. "Why didn't you put the bet on?" says some bright spark. "Because I didn't want to lose my money" you answer.

And that is the point!

You chose not to gamble. If you had gambled you would have won. But you didn't. Because you didn't want to lose your money.

There are millions of gambles you can choose to take every single day. You chose not to take this particular one. So you didn't win. There really is nothing more to say.

DailyNameChanger Thu 09-May-13 09:43:32

We always do fixed rate. Yes we have been paying over the odds but I am old enough to know several people who lost their homes in the late 80s crippled by high interest rates and never financially recovered. I prefer having less spending money now if there is even a tiny risk that could happen.

SchnitzelVonKrumm Thu 09-May-13 09:45:25

yes I think the third way would be great. Somewhere in the middle of where interest rates have been for the past 30 years. Perfect.

The long-term average for UK interest rates is roughly 5 percent. Rates five years ago (just before the crash) were near that level. We were in the same position and would also have taken a five-year fixed (we didn't buy the house in the end) on the assumption that borrowing costs were at least as likely to rise as fall. So I understand your frustration (though you could have refixed at a lower rate) but I think you're being a bit disingenuous.

niceguy2 Thu 09-May-13 09:46:01

I hope after so many pages that OP understands now that this is just how the world works.

In reality there is never going to be a fair system for all. Not unless everyone always got the same interest rate and that never varies...ever. That simply isn't realistic in the real world where prices change.

You don't moan at the end of the year when you haven't claimed on your home insurance do you? And you presumably would have sat there all smug had interest rates rocketed and patted yourself on the back for all those muppets like myself who decided to take the risk of a variable rate.

Right now OP, if I were in your shoes I'd arrange some meetings with various IFA and work out how you will proceed. Because as I see it you are at a crossroads. You appear to have an interest only mortgage so I hope to God you have a vehicle to pay off the capital. Otherwise you will be fucked.

curryeater Thu 09-May-13 09:53:12

I think what Mintyy is saying might be something like: why is it that the only secure and sensible way to have somewhere to live necessarily ropes you into posing as a financial speculator, whether you ever wanted to be one or not, and being exposed to the risks thereof.

playing devil's advocate: well to some extent you are doing it for the benefits of financial speculation too, so you can't have it both ways

My real view: this housing business in this country is so well and truly fucked up

Bearbehind Thu 09-May-13 10:05:50

mintyy I have just had a look on your thread in Chat- you need professional help for this, you can't just post the details you have done and expect to get an answer that tells you what you should do.

FFS you haven't even disclosed your income which is a pretty fundamental part of getting a mortgage.

I don't expect you to do this on a public forum but you need to understand there is more to making this decision than asking your cyber mates!

Another huge factor is the loan to value ratio, so any advisor needs to know more than 'The house is worth more than the current mortgage'

The mortgage payment figures you have quoted both on the old and new rates, indicate you are on an interest only mortgage, so where do the £500 overpayments go to when you make them?

What repayment vehicle do you have for the remainder of the captial?

Do you have any other debts?

The biggest limiting factor you are likely to have now over 5 years ago is that fact you are both self employed and self certified mortgages are a thing of the past.

You stand virtually fuck all chance of remortaging today on an interest only mortgage as a self employed couple with dependant children.

TBH- you'll do well to get anything better than 2.5% at the moment and the money markets aren't expecting rates to rise until 2018, so you might not be as badly off as you think you are.

Take some responsiblity for your situation, get professional advice and make the most informed decision you can based on the options available to you.

Crikeyblimey Thu 09-May-13 10:50:32

Bear - exzellent post but as my wise old mother was often heard to say "save your breath to cool your porridge"! She's not listening.

Bearbehind Thu 09-May-13 10:54:33

I fear you are right crikey but I thought I'd give it one last go!

happyyonisleepyyoni Thu 09-May-13 10:55:41

We fixed for 5 years too as we (I) was worried what would happen if interest rates went crazy - we have a big mortgage.

I don't even want to think about how much more money we have paid over the last 4 years!!

Feel for you op, but as others have said, we've paid a price for certainty.

This is why our housing market is screwed up. Because people treat their homes as an asset expected not only to maintain and increase in value but to turn a relatively quick and large profit. We have a fixed rate not to save us money but to ensure we have steady costs for our housing. Fixed rates work brilliantly for that. I don't want the value of our home to fall and we bargained carefully to ensure that in 2008 but neither do I think it's my right to make £100,000 on it by the end of the decade.

cumfy Thu 09-May-13 14:31:56

YABU, you should have chosen a mortgage provider that only sold one product. wink

Is MN giving too much choice allowing us to post what we like ?

Or should their just be one OP and one response ?

cumfy Thu 09-May-13 14:38:03

Also, you knew exactly how much it was going to cost for 5 years.

And you paid that. confused

It's not like you bought one of these exotic LIBOR-hedged mortgages where the banks then manipulated the LIBOR rate so that even though the mortgage should have been hedged, it ended up not being.

andubelievedthat Thu 09-May-13 14:50:56

Or to sum up ,you made a choice ,you opinion it was wrong because your too thick to take a gamble /choice ,you think you "lost", your pissed off ,get over yourself Will you ,it"s called LIFE.

Kewcumber Thu 09-May-13 16:24:56

I hesitate to post again as you pretty much ignored my eminently sensible post... but I'm a sucker for being ignored.

Why do you keep saying that you took a gamble and you didn't want to? Fixing your rate is the exact opposite to taking a gamble - you borrowed money, you decided to agree a fixed rate (just like say a personal loan) so that you knew exactly what your payments would be rather than variable rate (like say an overdraft). Variable rates are a gamble - you have no idea if your payments will halve or double - but if you have spare cash or plenty of nerve you decide to take the risk that the rate won;t go up.

You pay for the security - you will never get a fixed rate thats lower (or even as low) as a variable rate (unless in exceptional cases and the markets are fairly certain for some reason that rates will go down).

Interests rates are complex, they aren't controlled by one individual or even one company or even one government. Interest rates move depending on Uk and other countries interest rate and economic performance and predictions of what will happen to these in the future. Because we live in a market economy the market automatically adjusts rate every second of the day based on the above. Mortgage lenders go into the market and buy tranches of money to lend at a fixed rate themselves.

If you don't want to gamble - you buy the clothes you like when you see them and pay the price on the ticket, if you'd like to gamble you can wait for the sales and get it at 50% off. You paid the ticket price, grumbling that someone else took the risk and got it cheaper doesn't mean you paid an unfair price, however annoying it might be.

Bobyan Thu 09-May-13 16:50:13

Kew great post, but I think the op is too busy being all "woe is me" to listen.

Ilikethebreeze Thu 09-May-13 16:52:43

I dont get why people dont understand Mintyy.
She is forced to take a punt, but doesnt want to have to.
She would probably say the same thing whether she won or lost on it.

Dont know if historically, everyone has always had to take a punt.

Some people, most people I would have thought are not natural gamblers.

Alwayscheerful Thu 09-May-13 16:56:46

Not fixing ie variable rate is a gamble, your rate and payments will fluctuate with base rates.

Fixing your rate is just that, a dead cert, no gamble, you know what rate you will pay and you know what your payments will be for a set number of years. I see it as the same as a variable mortgage but you will pay an extra payment, a sort of insurance to insure against rates rising. If rates rise you are quids in, if rates stay the same nothing changes BUT if rates change you loose out.

In choosing a mortgage, you need to consider how much money you have spare each month, if funds are tight most will need the certainty of a fixed rate and a setnpayment, if funds are plentiful you can consider opting for a variable rate i consider it self insurance, all the risk is yours if rates go up, all the gain is yours, if rates go down you save money and if rates stay the same nothing changes.

If you choose a fixed rate mortgage, you will always have the option to buy yourself out, you might do so because rates look likey to fall, because you need a bigger house, because your house has increased in value or just because you want to re- mortgage and raise funds but that is the disadvantage of a fixed rate mortgage and why I like to avoid them, redemption penalties are usually several thousand pounds but should be a major consideration when signing up for a mortgage.

Ilikethebreeze Thu 09-May-13 16:59:21

Fixing is a gamble too. It may not feel like it, but it is.
And that is her point.

Kewcumber Thu 09-May-13 17:01:13

She didn't take a punt - she agreed a loan at a fixed rate. People have been taking fixed rate loans for years - I had my first car on a car loan with a fixed interest rate. When the loan finished I didn't recalculate how much I would have paid if I'd done it via an overdraft instead confused

Going with a variable rate is a punt not a fixed rate. I suspect the truth is that OP is quite happy with a fixed rate, she just wanted one that was cheaper. But there presumably wasn't one that was cheaper around at the time.

Some people are not natural gamblers - they are the people who should be on fixed rates.

She wants to say "I like that dress - I'd like to buy it now at the price you will reduce it to in the sale"
"Sorry madam we don't know what price it will be in the sale - it depends how popular it is and how much stock we have left"
You either take the risk or you don;t - if you don't take the risk then you fix the price in advance - what the final price turns out to be for those who took the risk isn't relevant to you - you want the certainty and you pay for that.

Kewcumber Thu 09-May-13 17:04:43

Fixing if not a gamble shock

Fixing is the opposite of gamble. Gamble means not knowing what you will get/pay in the end.

You put your money on a horse and have no idea what if anything you will get back - that's a gamble. Giving someone money and agreeing a payment schedule that cannot move, not one penny during the term of the loan isn't a gamble. You know what you borrowed you know what you pay back. No gamble involved.

I could get into economic risk/reward theories but perhaps not...

slhilly Thu 09-May-13 17:06:57

I think this statement of Mintyy's really gets to the heart of the problem: "I am saying that it is wrong to ask everyday (even reasonably well educated people like me and dh) to take a punt on what interest rates are going to do when they take out a mortgage."

That sounds distinctly like she believes that this is Someone's Fault. That someone ought to Make Things Better. She seems to just completely ignore the obvious reality that no-one can make changing interest rates go away - for her, for any of us, for financial institutions, for the governments.

It rather reminds me of this fairly brutal quote: "A religion is sometime a source of happiness, and I would not deprive anyone of happiness. But it is a comfort appropriate for the weak, not for the strong. The great trouble with religion - any religion - is that a religionist, having accepted certain propositions by faith, cannot thereafter judge those propositions by evidence. One may bask at the warm fire of faith or choose to live in the bleak certainty of reason- but one cannot have both." [Robert A. Heinlein, from "Friday"]

Mintyy seems to have a pretty strong faith that it is possible to structure a 25 year loan in a way that shields her from interest rate fluctuations. Now the "bleak certainty" of the real world is intervening, saying that to make her dreams come true, we would have to eliminate interest rate variations in the first place, which is impossible.... and she doesn't like this, at all.

Ilikethebreeze Thu 09-May-13 17:16:43

Maybe we are disagreeing on words.
When you have to make a choice, any choice, or also no choice at all on something, I would call that a gamble. Perhaps many people would not.

Ilikethebreeze Thu 09-May-13 17:18:01

I will rephrase that.
When you have to choose option A, option B or to stay with option C, I would say that they are all gambles.

curryeater Thu 09-May-13 17:20:52

Of course - I get that - the gamble with fixed rate is not "what will I have to pay in this case" but "what will turn out over time to have been the better deal"?

Mintyy is imo not objecting to the fact that interest rates change, but to the fact that our cultural orthodoxy is that one must buy a house to have any stability and so having a home makes you a de facto player of the market.

EverybodysStressyEyed Thu 09-May-13 17:26:56

So does having a pension or isa's or a savings account

Or buying petrol or food or anything else

Kewcumber Thu 09-May-13 17:34:11

But buying a house on a fixed rate mortgage is not any different substantially to renting confused, unless you are going to pitch a tent on common land you have to pay something for your housing whether you own it or not.

If you are going to take the work gamble to mean choice then you can turn the myriad of decision you make through the day as "gambling".

Most people equate gambling with risk/reward - am I prepared to take more risk for the chanc of a bigger reward. On the whole the more risk you are prepared to take the bigger your potential reward. Mintyy didn't take any risk at all so has no "reward".

EglantinePrice Thu 09-May-13 17:35:41

Well you're right, no one has to take 'a punt' on their mortgage...

Ilikethebreeze Thu 09-May-13 17:43:17

If you look up definitions of the word gambling, it can mean different things.
So I suppose we could all debate this till the end of time smile

BoundandRebound Thu 09-May-13 17:58:50

You chose fixed so the extra payment is your insurance premium that you will pay the same amount each month. Admittedly an expensive premium but a premium nevertheless.

I too think you are being rather entitled and whiny

But I fell off fixed rate 3 months after rates started to tumble and have been on tracker ever since which is pegged above base rate so in the game of mortgages it seems I won. If I lost I'd take it with good grace that I am an adult and made that decision

Mintyy Thu 09-May-13 18:47:31

Thanks everyone for continuing to want to contribute this thread. I thought I politely said goodnight last night. Whilst I am equally grateful to all for their comments, I would just like to say that tortoiseontheeggshell at 4 in the morning (you are in Aus aren't you torty?) and Ilikethebreeze this afternoon have grasped my point so its nice to know that someone out there gets what I mean.

And, really mumsnetters, even if you disagree with me very strongly, is there any need for some of the vitriol?

I have been accused of being entitled, whiney, impolite, vvvvvvvu, stupid, greedy, toddlerish, uneducated, and actually I am none of those things. But hey thanks all, I will read everything through again later tonight when I have more time.

everlong Thu 09-May-13 18:52:06

Hey I stuck up for Mrs but was ignored wink

Bearbehind Thu 09-May-13 18:55:41

ilikethebreeze not sure what you can debate until the end of time unless you are referring to the word 'gamble'.

There is no debate to be had over the OP's point as there is no alternative- everyone has to make a choice of some kind with regard to their choice of renting or having a mortgage.

Not doing so is not an option unless you want to live in prison i suppose!

I really don't know what people who say they can see where the OP is coming from mean. Yes it's shit that you might win or you might lose but that's life. There are no guarantees. We'd all like the best possible outcome in every situation but it ain't going to happen.

What some people don't seem to get is the OP got what she wanted 5 years ago- a fixed rate for a fixed term based on the information available at that time.

The fact that interest rates went down 12 months later is just tough shit. She might have taken a 30 year fix if she'd been able to and she'd be worse off for the forseeable future.

Ilikethebreeze Thu 09-May-13 19:00:29

That is the joy of AIBU.
They may have been kinder on Chat.

scampadoodle Thu 09-May-13 19:43:55

YABU

In 1990 I bought my first flat for 56k. I spent a few years in negative equity but by the time I'd met my future DH & we decided to buy a house together the value of my flat had risen to about 87k so I sold it. Made a nice little profit, was very happy. Had I held onto it and rented it out I would now be sitting on an asset worth at least 250k. God, how I regret selling when I did! But I don't rail against the nasty property market for being so bloody unfair, no, I grit my teeth & think, Well I still made a profit and I didn't have the hassle of being a landlady plus I'd have been liable for Capital Gains Tax had I sold. In short I took a gamble without knowing what the future would hope. 'Tis life.

scampadoodle Thu 09-May-13 19:44:38

hold not hope!

MummytoKatie Thu 09-May-13 20:13:57

Mintyy - the two people who agree with you have not "grasped your point" - like you they have unfortunately missed the point.

The other 280 odd posts have all explained to you in different ways (some of them are really rather impressive) how you did not have to take a punt, how - in fact - you didn't take a punt, how you got exactly what you wanted when you described your perfect solution and what you need to think about in the future.

You seem to have ignored all these posts and then wonder why people are getting a teensy bit frustrated with you.

Talkinpeace Thu 09-May-13 20:15:31

Mintyy
I'd believe you genuinely wanted advice if you had messaged me.
You have not so clearly do not.
Thread hidden.

MummytoKatie Thu 09-May-13 20:30:50

ilikethebreeze - there is more than one definition of the word gamble but a fixed payment, paid at fixed times, for a fixed term is never going to be one of them.

There are different definitions of the word "cat" but it doesn't matter how much you point at my dog and shout "cat" - he is never going to be able to do a convincing "miaow".

Mintyy Thu 09-May-13 20:36:11

MummytoKatie
The "gamble" is whether to go for the fixed rate or the svr. That is the gamble.

MummytoKatie Thu 09-May-13 20:38:16

That isn't a gamble. That is a choice. The choice as to whether to gamble (get the SVR) or not to gamble (get the fixed).

Mintyy Thu 09-May-13 20:47:26

It is a gamble. You gamble on paying more or less than the fixed rate.

Bearbehind Thu 09-May-13 20:52:10

mintyy you said your DH agreed with you and thought you might as well have just spent the money a casino- do you really not understand that if you had done that you'd either have been loaded or had fuck all?

The whole point of fixing rates is it's not a gamble, it has a 100% guaranteed outcome which may or may not turn out to be the best option with the benefit of hindsight.

If I were you I'd be much more concerned at being 50, with 2 dependent children who will want to go to university and a £180k interest only mortgage, than worrying about things that have been and gone and which you can do fuck all about.

MummytoKatie Thu 09-May-13 20:52:46

So do you also think walking past the bookies and not betting on a horse is a gamble?

Kewcumber Thu 09-May-13 21:07:16

I'm out - forehead hurts from banging it on the keyboard.

everlong Thu 09-May-13 21:13:20

Crazy thread.

EverybodysStressyEyed Thu 09-May-13 21:17:05

you are correct

the fixed rate gives you certainty so you can budget etc etc

the gamble is taking the variable rate and hoping that rates will go down but facing the risk that they may go up

in this case by taking the fixed you didn't gamble.

BIWI Thu 09-May-13 21:20:40

Both are a gamble.

If you take out a fixed rate, you are buying certainty. You will know each month exactly how much you are going to pay. That certainty, for many of us, is worth paying for. The longer you fix the term for, the more risk there is in your gamble.

But the gamble is that over the course of the lifetime of your mortgage, the rates won't go below (or too far below) the rate that you are paying. And, of course, you are protected from rate rises. You mustn't forget this

If you take out a variable rate, you are gambling that the rate won't go up too much, but that it could also go down.

Thing is, when you took out your mortgage, your fixed rate, by historical standards, was actually quite low. Nobody knew/could predict that interest rates would end up as low as they are now, or that they would remain that low for such a long period of time. In other words, you were actually quite wise at the time. You made a good decision, based on what you knew.

However, you also chose to fix your mortgage rate for 5 years, which is more of a gamble, as no-one can predict rates that far ahead. But again, you were buying certainty and that delivers security.

You have been unlucky in that rates have dropped significantly below what you are paying. But you have still bought your certainty. And don't forget that the rates didn't go up! You were protected from that.

We have been lucky (sorry) in that whenever we have taken out a fixed rate, the rate has always been low and the prevailing interest rate has rarely gone too much lower than that.

I really understand where you are coming from, and it sucks to know that you didn't need to have spent so much money - but it could also have gone the other way so easily - remember the time in the 80s when rates went up to 15%? Well, you have been protected from the risk of that happening.

I think YABU Mintyy - sorry - it doesn't matter if you are ordinary or the chosen one. You have borrowed money, and you have made a considered choice to borrow in a certain way. I actually think that you and your DH were very wise to make the decision that you did - you were just unlucky in the market circumstances. But be positive about the fact that if you take out a fixed rate now, at the current low rates, you could end up paying an awful lot less than the variable rate - the rate is bound to rise at some point in the future. So if you can fix a really low rate now, for the next 5 years, then you should benefit from that.

Mintyy Thu 09-May-13 21:35:30

Yes, both are a gamble.

<whole point of thread emoticon>

MummytoKatie Thu 09-May-13 21:42:56

No. The fixed is the certainty. Everything else is a gamble in comparison to the certainty. But, by definition, a certainty cannot be a gamble.

Mintyy Thu 09-May-13 21:56:26

But choosing between a certainty and a gamble is a gamble.

Ilikethebreeze Thu 09-May-13 21:57:38

Quite.

Ilikethebreeze Thu 09-May-13 21:59:20

The gamble bit is the bit before you choose, not after you have chosen.

Mintyy Thu 09-May-13 22:01:16

Got there in the end.

Saying farewell to this thread now.

Thanks for everyone for all thoughts. If anyone has genuinely been banging their head on the keyboard over it Kewcumber then I am truly sorry for that!

Saddayinspring2 Thu 09-May-13 22:06:16

It's annoying to have paid more money than you had to but you made the choice which was a reasonable one at the time... Except I hate fixed rate mortgages and I think Banks used to be on a mission to sell them which I took out once and swore never again. Repayment variable rate and flexible every time.

Bearbehind Thu 09-May-13 22:13:21

My last attempt at trying to explain this to mintyy and ilikethebreeze

If you want to drive to a nearby city and there are several roads which lead to that city, you have to choose one of them if you want to reach your destination.

You can check the internet for reported road closures or accidents but you can't legislate for what might happen once you've set off.

If it turns out the route you chose is closed because a lorry has jack-knifed and you get to the city 3 hours later than if you'd gone a different way you wouldn't say 'I took a gamble and it didn't pay off' you'd say 'bugger, I made the wrong decision'

The fixed rate versus variable rate decision is exactly the same, you have to go in one direction and it might not turn out to be the best choice.

Alternatively you can decide that you need someone to wipe your arse forever more.............

Kewcumber Thu 09-May-13 22:19:21

Don't worry Mintyy - it occasionally does me good to grasp that I have clients that look at the world a wrong different way to me. It makes me a better person. Though my keyboard is bloodied

Bearbehind Thu 09-May-13 22:21:00

PMSL at 'got there in the end'- one other person is on the same planet as you and you think you've proved your point- I'm off to bang my head against a brick wall now.

Kewcumber Thu 09-May-13 22:22:51

try a keyboard bear - comfier.

MummytoKatie Thu 09-May-13 22:23:08

Debates giving bookies analogy again but I've given it twice and I just can't face it!

Ilikethebreeze Thu 09-May-13 22:24:15

Actually, I would say the first one, not the second.

Ilikethebreeze Thu 09-May-13 22:25:21

Never mind. I agree to differ with virtually everybody.
I dont really care. It is really just a debate about words.

TheDoctrineOfSnatch Thu 09-May-13 22:30:29

Next up: why vacation cottages cost more in the school holidays.

<pulls pin, chucks grenade, legs it>

Ilikethebreeze Thu 09-May-13 22:32:50

I prefer "what do we think will happen to interest rates in the next five years". Much more topical!

Bearbehind Thu 09-May-13 22:35:49

ilikethebreeze have you been sniffing paint or something? You are making no sense at all and, as just about the only person who agrees with mintyy, you are not doing her any favours wink

MummytoKatie Thu 09-May-13 22:35:57

Because the cottage owners are big meanies and have stinky bottoms and it's just sooooo unfair

(I'm 37 weeks pregnant. I'm supposed to be watching my blood pressure. If I stay on the side of sanity and logic it is so not going to happen!)

Crikeyblimey Thu 09-May-13 22:36:20

Ha ha ha! Is this REALLY still going on?

Now can someone tell me why red roses are more expensive on 13th and 14th Feb than they are on 15th?

Bearbehind Thu 09-May-13 22:38:44

I don't know crikey but it really pisses me off that fireworks are so much more expensive on 4th November than the 6th!

Ilikethebreeze Thu 09-May-13 22:45:53

Bear. Why am I not doing her any favours? I think she or someone said she had another thread. Am I upsetting her financial arrangements in some way?

Bearbehind Thu 09-May-13 22:49:14

Because you are not making any sense and are not offering an arguement to the very valid points made on about 300 posts on this thread.

It would be lovely if you could have the best possible outcome in every situation but you can't so you just have to get on with it.

MummytoKatie Thu 09-May-13 22:54:16

Why is soft play more expensive at the weekends?

ivykaty44 Thu 09-May-13 23:29:00

I never use soft play so had no idea it was cheaper in the week day

MummytoKatie Thu 09-May-13 23:40:04

Yep. And to add insult to injury at the weekend it is absolutely jam packed full of kids!

ivykaty44 Thu 09-May-13 23:43:37

no - kids get everywhere now, next they will be in the bookies first pubs then hotels and mark my words they will be in Barlows bookies quicker than you can say jack sprat...

Kewcumber Fri 10-May-13 00:14:38

I'd like to know why adults have to pay £1 entry to our local soft play?

Mimishimi Fri 10-May-13 00:28:59

Mintyy, were you aware that the banks also borrow money to lend to homeowners? They also have to pay it back with interest although the interest is less. For the past couple of years, they've been able to borrow at virtually zero interest rates and that is why they've been able to lower rates for their customers. When they take you on, the loan they give you is a reflection of the rates that they are paying at the time of granting the loan, not future rates. You're actually lucky that you've come off the fixed rate period into a low rate environment. Imagine if you came off it and rates were 9-10%? They also have to gamble that their customers will be able to pay them back, which is what all the kerfuffle about failing banks was a few years ago, because they'd either made loans under incredibly lax conditions or had bought mortgage debts from other banks thinking they'd be able to get those debtors to pay ( but couldn't).

Like PP's have said, financially, you will do best if you treat it like you've never come off the fixed and keep paying your £800 a month - seven years feast/famine type scenario for when rates do rise ( and they will).

Spuderoonerism Fri 10-May-13 06:11:07

If you really want to insist it's a gamble then fixed rate is the same as going into a casino and playing perfect strategy blackjack over an large number of hands - you know pretty much exactly what it's going to cost you over time assuming you play a fixed number of hands per hour. Going with a variable rate is a gamble in the same way that spread betting on the total number of runs in the Ashes is a gamble - you could do well out of it (ie better than the person churning out the blackjack hands) or you could get absolutely shafted depending on how things totally outwith your control go and you have no idea what your maximum potential liability could be.

ivykaty44 Fri 10-May-13 15:32:36
Ilikethebreeze Fri 10-May-13 17:32:03

Mimishimi, can I ask you something about the LIBOR rate please and how it works.
LIBOR, is it not, is the rate at which banks are charged, or is it a rate and LIBOR adds commision on top?
[and then the banks add on their commission to us]
And the LIBOR rate currently is 1/2%, so realistically, it is not going to ever go lower than that?

caroldecker Fri 10-May-13 19:00:57

LIBOR stands for the London InterBank Offer Rate and is the average rate that banks lend to each other.
The govt base rate (0.5%) is the rate the Bank of England pays to banks who park money there overnight.
Generally, LIBOR is about the same as the BOE rate, but can be more (such as in the height of the crisis).
LIBOR cannot be lower than 0%, so practically as low as possible.
However, longer term (5+yrs) fixed rates are not based just on LIBOR, but where people expect rates to be over that period, because the bank will have to pay that rate to the shorter term depositors/lenders it gets its funding from.
Therefore fixed rate deals can go up and down whilst LIBOR stays flat

Ilikethebreeze Fri 10-May-13 19:07:16

Thanks for that caroldecker.
Do the high streeet banks, when they "buy" from the LIBOR, or however it is done, do they themselves get charged. So for instance, the LIBOR rate is 0,5%, but the actual cost to them is say 2.5%, then they charge another 2% on top to "sell" it to us? Is that how it works in practice?

Actually, I thnk I have managed to confuse myself.

lljkk Fri 10-May-13 19:32:14

It's called choice, OP had a choice <<shrug>>

TheDoctrineOfSnatch Fri 10-May-13 19:48:43

There are several different LIBOR rates, from overnight to 1 year. I think colloquially the overnight rate is usually meant. Banks wouldn't borrow mortgage finance at LIBOR as that's not a short term package.

blueshoes Fri 10-May-13 19:55:55

Minty, you should have rented. Oh fuck, rent goes up and down too! <Wails, beats breast>

Join the discussion

Join the discussion

Registering is free, easy, and means you can join in the discussion, get discounts, win prizes and lots more.

Register now