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!!

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.

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

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.

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

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.

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).

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.

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

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.

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.

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!

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 .

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 >

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?

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.

ty katy

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.

I love you anyfucker!

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?

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.