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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:
existentialmoment · 05/10/2017 14:39

I think I should have been made aware there were options other than the SVR. Ie: another fixed 2 year deal for example, which would have had an interest rate attached to it that was likely to be lower than the SVR

you could have looked at their website, for a start. It isn't the banks job to spoon feed you all your options.

Ploppie4 · 05/10/2017 14:40

I think it its your fault. You should have seen an independent adviser or done some research yourself. Take it as a lesson learnt and use it to educate yourself

ilovekitkats · 05/10/2017 14:41

It is up to you to ask the bank what deals are on offer, not expect them to tell you. (not saying this is right, but it is what happens).

I always use a financial advisor, who looks at the whole of the market and then gets me the best deal available for me and my situation. Everyone has different needs, interest only or repayment, or ability to make overpayments/take mortgage breaks etc, so it is up to you as the customer to ask for a mortgage that suits you.

I would seriously recommend that you go to a financial advisor when you next require a mortgage. Make sure that you make a note now of when this deal ends, is it 2 years? 5 years? 10 years? and then get appropriate advise at the time.

GrumpyOldBag · 05/10/2017 14:41

It is possible that when your deal expired and you went onto the standard variable rate that was the lowest available rate at the time. It is only in the past few years that rates have really plummeted.

So you could have continued to monitor your rate regularly. At least you are on the right track now.

We all make mistakes - I'm quite sophisticated financially (used to work in the finance sector) and we switched onto a 5-year fixed rate a couple of years ago, which in hindsight was too early and we have been paying quite a bit more than we would have if we 'd stayed on our old tracker rate.

Hindsight is always 20/20 !

Original poster
highlandtime · 05/10/2017 14:41

When I talk about rate changes, I mean asking the bank to be switched onto another product. I have just done this, and it was as simple as choosing one of their deals, and requesting it. There were no questions asked or affordability/credit checks etc carried out. I am wondering why I wasn't offered this in 2009 and advised the SVR was my best option?

OP posts:
Aridane · 05/10/2017 14:41

OP - I take a different view to other posters. Financial institutions then - as now - are under an obligation to treat customers fairly and to explain things clearly to customers.

I see no downside to you writing a letter addressed to the Complaints Dept of your Bank. Set out your complaint and the redress you are seeking - ie presumably the difference in what you would have been paying had you been on a 'better' deal other than a SVR.

The Bank will acknowledge your complaint within 5 days and send you their complaint handling procedure. You should get a final determination within 4 weeks, maximum 8 weeks.

If you don't like their response, you can refer free of charge to the Financial Ombudsman Service. They will review your complaint and the Bank's response and make a final determination.

You have nothing to lose by proceeding this way.

sunshineintheclouds · 05/10/2017 14:41

Confused erm I think you need to recheck what you have actually done op.

PetitFilous123 · 05/10/2017 14:42

You would have to have re-mortgaged at the time to get a new fixed rate. I would ask for the call record, although I don't think they will have it now.

I think it's possible you misunderstood rather than they didn't advise you, which to be fair you probably didn't ask them to do, even though you might think it was obvious to them that you wanted advice. You should have made an appointment and gone to speak to a proper adviser. Not helpful now, but a good learning experience.

Papafran · 05/10/2017 14:43

I think I should have been made aware there were options other than the SVR. Ie: another fixed 2 year deal for example, which would have had an interest rate attached to it that was likely to be lower than the SVR

But do you know precisely what was available in 2009? Because otherwise, how can you prove that the bank misled you?

You are doing very well now with a 1% deal- you must have a decent amount of equity to get a rate like that. If you live in London and are making repayments of £200 per month, that's at least something to draw comfort from....

Roomster101 · 05/10/2017 14:43

Maybe it was their best deal at the time but even if it wasn't, as with anything they can offer to sell something at a certain price and you decide whether to buy it. Sorry, but you sound completely clueless -you really need to speak to a financial advisor.

Original poster
highlandtime · 05/10/2017 14:43

Thank you for responses. I really am not sure whether it is entirely my fault or whether there is some recourse with the bank. Good to hear views on this.

OP posts:
existentialmoment · 05/10/2017 14:44

your figures don't add up anyway, btw.

Floralnomad · 05/10/2017 14:44

Sorry but it's entirely your own fault and frankly if you have really had an interest only mortgage for 11 yrs and have saved nothing towards actually paying for the house I would get a proper repayment mortgage asap rather than assuming you are going to save it all from now .

ThreeFish · 05/10/2017 14:45

You need to sit down with an independent financial advisor. Usually free of charge. It's madness to be paying interest only mortgage. You do realise you are taking a massive gamble with your house when the term of the mortgage is up?
The bank will repossess it easily and quickly if you can't raise funds to pay off what you will owe.
Get some advice, and not from a bank.

Original poster
highlandtime · 05/10/2017 14:45

From a conversation with the bank I know that they had a deal of 4.1% at that time. I was paying just shy of 5%

I think it may be worth lodging a complaint.

OP posts:
Original poster
highlandtime · 05/10/2017 14:46

My figures are the approximate real figures. Ridiculous to say they don't add up.

OP posts:
Lindy2 · 05/10/2017 14:46

1% on an existing mortgage seems very low. I'd be wondering what terms have you commited to and what fees you've just paid for this deal.
It may well be that when you went on to SVR that was the best deal at the time. I doubt there was a 1% option then.
Just like savings accounts, investments, all your finances really, you do have to take responsibility for reviewing things periodically (at least every 3 - 5 years) to ensure what you gave is suitable.

ShotsFired · 05/10/2017 14:46

By way of comparison, I am looking at remortgages right now.

There are indeed many available which are 1.09% and similar - trackers though, not fixed. Fixed were more like 1.19%. Product fees of c.£1k on both.

I did initially try asking my current lender just as a first call, but they insisted I needed a 3hr appointment which they couldn't provide in person till at least December (I gave up offering dates after we reached November - they were unable to simply say "we have this or this appt"). Or I could go and sit on a skype call in the branch instead Hmm

I was sat in front of an independent broker not 3 days later getting the above rates, which beat the current lender's products hands down.

Ploppie4 · 05/10/2017 14:47

Yes complain. However I think you’re really at fault.

Majormanner · 05/10/2017 14:47

I absolutely had no idea about mortgages and didn't question what the bank told me during my call with them.

This is why you should have considered financial advice at the time - you may not have been aware of it and this is why i believe school children should have this education before they are legally able to get into this kind of debt

Mari50 · 05/10/2017 14:47

YABU to have been that stupid about your mortgage. If you were that clueless you should have paid for some financial advice.
Learn from this and make sure you are informed or do some research into things you have no idea about in future.
I can see why you're gutted though.

Original poster
highlandtime · 05/10/2017 14:47

The new deal is 2 yr fixed just over 1%. It is a relatively low mortgage loan, about only about 1/3 of the value of the property.

OP posts:
Hereward1332 · 05/10/2017 14:49

Whether you have grounds for a complaint depends on what you asked during the call. If you asked what happens when the fixed term expires, then they answered correctly. If you were asking for advice, they can only give this under strict conditions having done a suitability assessment - selling you a new mortgage could equally have lain them open to allegations of mis-selling if, for example, you could pay the balance off in 12 months and they sold you a product with a repayment penalty.

If you were not asking advice, they are under no obligation to tell you a different mortgage may suit you better.

If however you did ask for advice rather than information, they should have referred you on, or told you they could not provide it. This may be your best angle.

If they reject your complaint, you may find they argue it is too late to go to the ombudsman. The ombudsman's compulsory jurisdiction lasts for 6 years after the event, or after the time you were reasonably aware that things were wrong. In this case, I think you would be hard pushed to claim that you did not know a mortgage could be paid back early for 6 years. That said, the bank can allow the ombudsman to look into the case.

TiramisuQueenoftheFaeries · 05/10/2017 14:50

From a conversation with the bank I know that they had a deal of 4.1% at that time.

But you don't know that you were eligible for it. Banks were not exactly dying to offer people interest-only mortgages at low rates in 2009.

Papafran · 05/10/2017 14:50

But if you discussed a 4.1% deal, then surely they did tell you about other rates? Did they actually tell you that it was better for you to pay a higher rate? Also, interest rates then dropped quite sharply after 2009, so it might well have been better for you to stay on the SVR but keep an eye on the market and fix as soon as they dropped.