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

[Mintyy]

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!!

What bearbehind said!!!

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!

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.

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.

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.

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

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.

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.

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.

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.

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

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.

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.

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

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.

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

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

Or should their just be one OP and one response ?

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

And you paid that.

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.

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.

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.

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

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.

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.

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