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

[highlandtime]

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

How did you get a new two year fixed deal without remortgaging?

If you’d have waited, you may have struggled to get on the ladder now like many people including myself.
Be glad you have a mortgage and you now know what your doing.
You won’t get anywhere with your bank as it’s not misleading if they just ‘didn’t mention’ other deals.

I doubt you'll get anywhere pursuing the bank, it was your responsibility as the homeowner to seek independent advice (which the call to the bank was not).

If I were you I'd keep paying the £1200 at the new interest rate, then when you come to remortgage, and interest rates have risen (which they almost certainly are set to do) you'll have much more equity in the property and be able to get much better deals.

When you do come to remortgage again, seek independent whole of market advice, from someone such as L&C who are also free (paying for financial advice does not make it better).

Also, I just want to be really clear here, you understand that on an interest only mortgage, if you make no additional repayments, that you'll have a huge amount to pay at the end of the mortgage term?

Before you do anything go to an independent mortgage adviser / broker to get your situation reviewed. You will be paying to get advice, which is something highly unlikely to be offered by your bank. IMO an interest only mortgage is a dreadful idea.

How did you get a new two year fixed deal without remortgaging?

She did remortgage. But only recently.

To be honest, it's a pain, but you sound like you are pretty well off financially with only a 33% LTV mortgage in London- your property must be worth quite a bit now. You are lucky you were able to buy when you were young and in London as well- many will never get on the property ladder because the amount needed for a deposit is so high now. I would count my blessings and focus on paying off the capital.

They mentioned the 4.1% when I asked for it to be looked into just now over the phone.

I am going to continue paying off at the rate I have been by making overpayments.

highland
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%
so at the time there was a differance of less than 1%
don't think you were ripped off massively at the time.
I am sure their SVR went down after the financial crisis.
I have lost £100s because of low interest rates on my meagre savings since 2008

• those are the breaks when you sometimes lose and there is nothing you can do about it. Hindsight is a wonderful thing

It's not quite as bad as you think as rates weren't that low all of the time.

Do what you can to get it sorted, but stop beating yourself up, you made a mistake 🌷

OP - my earlier post recommended you do a letter to the Complaint Dept of your Bank and then refer to the Financial Ombudsman Service if you are dissatisfied with the response.

FYI - the Ombudsman had to deal with a large volume of mortgage cases back in 2002 where a bank would have more than one SVR and didn't actually put customers on the better SVR. Not quite on point with your case. But just letting you know as really the Ombudsman is well used to dealing with complaints of the nature you have.

You may not get anywhere - but there is no harm in trying. And you will find the Ombudsman a lot less judgmental than posters here!

I really just feel very angry at myself for not knowing more but agree should count my blessings

For comparison, our mortgage rate in 2009 was 7.9%, we remortgaged in 2014 to 3.7% and then again last year at 1.4%. Our LTV isn't as good as yours though but it shows that mortgage rates have only relatively recently come down to such low levels.

Wow! You were paying £1200 pcm and it was interest only? That's tens of thousands of pounds with nothing to show for it. Get an independent mortgage adviser in future. I feel very sorry for you but, as others have said, it's your responsibility to understand your own finances.

Thank you Aridane

Its not their obligation to make sure you are paying the least possible, only to make the information accessible.
If they told you you would go onto the SVR and what that rate was and you said "ok then" then its not up to them to walk you through all the other options.

Its not their job. I remortgaged in 2008 on a svr as it was the same as a 2 year fix and i suspected interest rates would fall.

Not long after I applied and post lehman they introduced a lifetime tracker mortgage with a ridiculously low interest rate. I found out becasue I checked an looked around and switched. So I'm afraid the onus was and is on you to make an effort to understand what you are doing and if you dont, get a financial adviser!!!

@Chickoletta I can hardly believe that either!
Interest only? For 11 years?

Have you definitely checked you will not be penalized for overpayment on this scale? If you intend to over pay by £1000 every month there may be a penalty for that...

Have you definitely checked you will not be penalized for overpayment on this scale? If you intend to over pay by £1000 every month there may be a penalty for that

Yeah, most repayment mortgages only allow up to 10% overpayment. Not sure how it works on interest only. OP, as soon as the fixed period is up, see a financial adviser and switch to repayment.

You need to learn about mortgages first before blaming the bank - its really not complicated.

Three points - its entirely possible that at the time of the call the SVR was your best bet with that particular bank - your Loan to Value would have been very different and interest rates were different. Secondly, its not impossible - but I doubt that there was no information given to you about fixed rates v SVR - if they said it was the best for you to stay on SVR that in itself suggests that there was a comparison (the £7 was obviously the difference with the SVR - so they must have given you information about the SVR). Thirdly that was EIGHT years ago! It very probably was only a £7 difference at the time. If you haven't reviewed your mortgage or noticed that interest rates are at an all time low you again cant blame the bank!

So unless the bank said you have no other options and you must stay with this SVR now and for the next 8 years then you really can't argue they were misleading.

And you totally need to understand the basics of how mortgages work stat.

So are you now on interest only with the option to over pay by 1k a month? Why didn't you go for interest and repayment this time? I thought most mortgages limited overpayments to around 10%? Please check, otherwise you might incur penalties.

Petitfilous- you don't have to remortgage to get a better rate with your current provider. This is called a product transfer and can be done at the end of the fixed term. Remortgaging means moving your mortgage to another provider.
This is absolutely your responsibility to review your mortgage regularly and to check across the whole market. You can do this yourself, it isn't hard, or you can take advice from a financial advisor. Mortgage lenders have a legal duty to inform you that your product was coming to an end but they aren't duty bound to then get you on the best rate. 5% SVR in 2009 likely was a good rate, however it is still your responsibility to review this regularly and you haven't done this at all! If you say they mentioned 4.1%, why did you request to be moved to that rate? You can't expect the bank to spoon feed you every financial decision you make. Similarly, I'm sure there were providers offering lower than 4.1% in 2009. Who's job would it have been to inform you of these rates? Did you expect your current provider to say there's better elsewhere or a new provider to pick up the phone to you? No. It's 100% your responsibility. Take some ownership!!

I was paying 5.29% in 2009, but was a first time buyer with a 15% deposit.

I do not think you will get very far with them and that phone conversation may not have been recorded anyway.

The terms and conditions on your mortgage offer would have been clearly stated out; it would have reverted to the standard base rate post the deal expiring. Any fixed rate deal has that condition attached to it and it would have been explained to you at the time.

I would now make to the bank what are called "capital repayments" (so an amount of say £1000 upwards and call it this as well when you do this) on the mortgage rather than just overpaying your monthly sub. Its no point at all in doing that.

If it helps I worked in a call centre for a building society and normal consultants cannot mention other rates as it could be classed as advice which only a mortgage consultant can give. The handler merely stated fact as they still would today.

*this was only 2 years ago