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Original poster

To have been this stupid about my mortgage? Huge financial loss

306 replies

highlandtime · 05/10/2017 14:11

Hello

I bought a house and took out a mortgage in 2006 when I was very young, and didn't really understand much about mortgages. The bank offered me a rate of 4.8% which was fairly typical at that time, and 3 years later when my deal expired I called the bank and asked what my options were. They said that when my deal ended I would automatically go onto the standard variable rate, which was only marginally higher than the rate I was on, and represented an increase of £7.65 to my monthly repayments. I understood that was a good deal, and was not told about any other options that might be available to me. I decided to let my deal expire and then go onto the SVR.

I had no idea that I could have chosen from the other deals they had on offer, I don't know why other than I was young and green and naive. During my phone call, the bank the didn't mention this either. I came away with the understanding the SVR was my best option and I was lucky it was only a small increase. I also thought that I now was stuck on the SVR unless I wanted to remortgage with another bank.

Today I was prompted to phone the bank following a chat I was having about mortgages with a friend. I asked for a 'rate change' and opted for a deal which brings my rate down from nearly 5% to just over 1% !!!!! My monthly repayment has changed from £1200 to £200. Great! But I cannot reconcile how I have been paying an interest rate of nearly 5% for the past 8 years.

I will call the bank and ask for the 2009 phone call to be reviewed (I took quite extensive notes and have kept them). I will also tell them I think I was misled. Does anyone have any advice or been through a similar experience and was anyone successful in recouping anything?

Thank you

OP posts:
caringcarer · 06/10/2017 19:12

It is not the banks fault they you had not done any research on mortgages and did not shop around to get the best rate. If you are on an interest only mortgage you are not repaying any capital and the house will never belong to you. If you were paying £1200 then you can clearly afford to move to a repayment mortgage, try to get a fixed rate for 5 years as it looks very likely rates will be moving up shortly and they sure as hell cannot come down any more.

Out2pasture · 06/10/2017 19:14

Your mortgage agreement comes to an end, they send you a letter saying they are switching you to another plan. This is pretty standard UNTIL you go in and make a proper new agreement.
Meanwhile OP there is nothing you have said that suggests you actually know what you are paying for.

VeryCunningStunt · 06/10/2017 19:18

I reckon they should have clearly warned you that they were not giving you independent advice, but only suggesting one oftheir own products

Really? Is it not obvious that if you contact Barclays about a mortgage, they're not going to recommend you take out a mortgage with HSBC because they offer a product that better suits your needs?

Original poster
highlandtime · 06/10/2017 19:44

My point is that the bank did not make me aware I could switch to another one of their own products - which would have been cheaper than their SVR. I was told on the phone this week that in 2009 they had a fixed deal for 4.1% - so why was I not told there were options other than going onto the SVR? I understood from my phone call in 2009 that the SVR was the only option if I chose to stay with that bank.

OP posts:
scottishretreat · 06/10/2017 19:45

Really? Is it not obvious that if you contact Barclays about a mortgage, they're not going to recommend you take out a mortgage with HSBC because they offer a product that better suits your needs?
Well, you may feel that, and I agree to some extent, but what matters is what the FCA rules say, and they say that they must make it clear to you (and I have often had my bank do this when setting up one of their products for me).
I think its also fairly obvious that taking a bank account with a monthly fee may not be the best choice unless the benefits are ones I want - but its also been ruled that banks should have told you that.
There are lots of regulations intended to protect people, in case they don't consider all these things, and the OP may be able to benefit from that, even if you think she should have done more research.

Original poster
highlandtime · 06/10/2017 19:46

Another point I do not understand is why the bank's SVR has hardly moved since 2009? 4.94% in 2009 and 4.74% in 2017.

Why has this not followed the BoE base rate more closely?

OP posts:
fliptopbin · 06/10/2017 19:46

OP, you think your situation is bad, we locked into a 10 year fix in 2006 at 5.6%, which seemed like a good idea as it was cheaper than the rate we were in before. We were gutted when rates dropped to historic lows. However, there was nobody we could blame, as neither we nor the banks had crystal balls, and nobody at the time would have predicted what would happen two years later.

Original poster
highlandtime · 06/10/2017 19:50

Having just looked at the base rate history please ignore my last post! The SVR is disproportionately high to the base rate though.

OP posts:
ThroughThickAndThin01 · 06/10/2017 19:52

What do you mean by your last post OP? The base rate has 'hardly' moved since 2009 Confused.

ThroughThickAndThin01 · 06/10/2017 19:53

X post, but that was a really basic point you had no idea about.

treaclesoda · 06/10/2017 19:54

The SVR is disproportionately high to the base rate though.

The bank is free to set their SVR however they see fit, just like all their other products and interest rates. It's just like any other service provider in that respect. It's like Sainsbury's are free to charge twice as much for eg a pint of milk as they pay the producer of that milk. Financial services are just another 'product' for sale.

Original poster
highlandtime · 06/10/2017 19:54

Yup. I am educating myself now, but I absolutely had no idea and a fear of this sort of thing for years.

OP posts:
eternalopt · 06/10/2017 19:59

I actually feel quite sorry for the banks!! The level of ignorance they have to deal with and then be responsible for is phenomenal!!

Sunbeam18 · 06/10/2017 20:01

Picturesjane Seriously?? You don't necessarily need to change lender, just change product instead of going onto SVR. How can anyone afford not to be totally on top of this??

dazedandconfused12 · 06/10/2017 20:01

Did you not notice the low interest rates for the last few years? It's annoying and regrettable but I don't see that you can pin this on anyone else?

treaclesoda · 06/10/2017 20:04

I worked in banking for a long time. I used to hand people their mortgage paperwork and have to beg them to read it before signing. About 90% of people picked the pen up and went to sign without even glancing at it. I always asked them not to and then left the room for ten minutes so that they could never say that they had been pressurised into signing. But very few of them did - I could see them through the window and they mostly signed as soon as I closed the door behind me then sat twiddling their thumbs.

HeyPesto55 · 06/10/2017 20:05

Definitely get a copy of the call. Mortgage advice is very heavy regulated. If there is something wrong with the call and they offered bad advice, they don't have a leg to stand on. That would be my first step.

It is possible, though, that you answered a series of questions that meant a SVR was the best for you. You are planning to move soon, for example. In hindsight, it would have been the best choice for me over the last 10 years. Bit I'm risk averse and went long term fixed rate. I thought I was making the rules but choice. As others say, hindsight is a wonderful thing.

Ultimately, you need to put it in perspective; you have made a capital gain, you are in London and you got a mortgage when it was much easier than it is now, you didn't choose to rent...

KickAssAngel · 06/10/2017 20:06

Some fixed rate mortgages are issued on the condition that you do go to their SVR for a certain number of years after the fixed rate ends. This is part of the t&c of the loan. We had this decades ago when the interest rate was about 15%. Then the interest rates dropped massively, and our mortgage co. said we had to stick to the high fixed rate for x years before going to SVR (now about 10% lower) as that was the way the mortgage was set up & they couldn't change it from the original loan conditions. Nor would they offer us another product of theirs if we paid off the mortgage & started over.

So we went elsewhere.

It is always a good idea to be as financially savvy as possible, but sometimes there are weird restrictions that apply in some scenarios and not others. It could be that they gave you the right advice at the time, but that a month later it changed.

We also moved in 2008, and got a letter confirming arrangements about our mortgage. One week later, they changed the policy and we got a letter completely reversing their policy. You try to keep up, but it can be hard to do.

QuiteLikely5 · 06/10/2017 20:12

thing is if you ring up and ask what happens when your mortgage ends and they say SVR you say ok thanks bye

How are they at fault?

LastNightMyWifeHooveredMyHead · 06/10/2017 20:20

The most expensive thing you'll ever buy and you don't bother to do any research? If this is true, it's really not your bank's fault Hmm

HeyPesto55 · 06/10/2017 20:21

KickAssAngel
I've not heard of that, sounds unusual...?

QuiteLikely5
Mortgage advice is regulated. My understanding is they need to lend responsibly and can't just 'upsell' to the most expensive product.

You should seek advice, OP. And now you know you don't understand it (you are not alone!), please get a financial adviser. It's possible with expert advice you'll make enough savings elsewhere to offset what you have lost.

GabsAlot · 06/10/2017 20:22

its possibl thy missold but there is usually a 6 year limit to complaining ive recently complained about a loan and told nothing they can do was 8 years ago and fca not interested eithr

Ginaxx · 06/10/2017 20:27

PicturesJane - yes you really should look at your options. I have a mortgage of 72k and I pay £180 a month interest only. You would save a fortune x

Fantasticday69 · 06/10/2017 20:27

Website says current SVR IS 3.74.
I do feel your pain to a degree. We took out a 10 Year fixed at 5% approx just before rates crashes. We could get out at 5 years and bit their hand off for a saving of 100 per month.

AccrualIntentions · 06/10/2017 20:29

I actually feel quite sorry for the banks!! The level of ignorance they have to deal with and then be responsible for is phenomenal!!

The banks come out ok though because when they have to give out compensation they just pass the costs on to everyone else, including those of us who have bothered finding out what we were signing up to Hmm

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