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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:
sparechange · 05/10/2017 15:18

I know it isn't a perfect analogy, but you are basically saying you are furious that you've been shopping at Waitrose for years and years when you could have been going to Aldi and saving money, but Waitrose didn't tell you Aldi existed.

It is frustrating, but it is entirely your own fault
You will have been bombarded with ads from mortgage companies offering great rates - on TV, on the tube, in the papers - plus the paperwork you signed will have included a keys facts illustration pointing out how expensive it is to stay on the SVR (unless you were very lucky and got a deal which defaulted to x% over the Bank of England rate, back in the old days)

You haven't been mislead or mis-sold. You've been totally financially ignorant and it has cost you money

Maybe now is the time for a full check up of your other bills - utilities, phone, insurance etc - to make sure you're on the best deal for them all?

Witsender · 05/10/2017 15:19

Seriously, this is what Google and the internet were made for.

Migraleve · 05/10/2017 15:20

I absolutely had no idea about mortgages and didn't question what the bank told me during my call with them.. But you can't see the fault here lies with you?

Do you not shop around for the best deals for things like insurances, mobile phone contracts, TV & internet? Hell I even fully investigate my options before buying a winter coat.

You were naive, I can't see where the bank are remotely liable. I think you need to give up on the witch hunt against the bank and accept you made a bad decision, but move forward with a firm resolve to be more savvy in future.

existentialmoment · 05/10/2017 15:22

Anybody else wondering where OP got a) the very large amount needed as a deposit on this very expensive house in London and b) the salary needed to be eligible for these rates when she doesn't understand mortgages, finances, and doesn't have the ability or inclination to do very basic research into same while squandering thousands?

PersianCatLady · 05/10/2017 15:26

I fail to see how you were misled
She wasn't but also she is assuming that she would have been able to get a rate of 1% in 2009, which she would not have.

Roomster101 · 05/10/2017 15:28

the salary needed to be eligible for these rates when she doesn't understand mortgages, finances, and doesn't have the ability or inclination to do very basic research into same while squandering thousands?

Perhaps she has other talents which pay well...

sparechange · 05/10/2017 15:33

Anybody else wondering where OP got a) the very large amount needed as a deposit on this very expensive house in London and b) the salary needed to be eligible for these rates when she doesn't understand mortgages

My rough guess from the OP's figures is that she owes about £220k

You could buy a house in London on a 100% mortgage and 6x your salary for that in 2006, so she didn't need to have a high salary or a big deposit for it
£1200 a month in mortgage payments is do-able on a £32k salary, and in London, that is a realistic salary for many jobs that wouldn't require you to be financially savvy

The bigger issue is how on EARTH the OP managed to avoid all advertising from all banks for over a decade, to not think 'hmm, I wonder if any of these great rates they keep talking about apply to me'

BillyDaveysDaughter · 05/10/2017 15:48

Totally agree Aridane maybe both of us are in this industry - there are a lot of responses rather ridiculing the OP for lack of comprehension.

OP you are entitled to raise a complaint that you were not made suitably aware of alternative options at the time, and owing to your lack of knowledge you didn't know that there may have been any - it might be rejected, but as Aridane has said, you have nothing to lose by trying. Just be ready for them to say that there weren't any other options available to you at that time.

You shouldn't be time-barred as you only recently learnt that you could have made the change. Yes, it is right that you should take responsibility for your own finances - but financial institutions also have an obligation to treat you fairly and in your best interests.

Sk77 · 05/10/2017 15:50

I can’t see that you’ve mentioned any annual limit on your overpayment amount? My mortgage doesn’t allow more than 10% overpayment a year. Do check this

Wherearemymarbles · 05/10/2017 15:53

As property prices have more than doubled since 2006 for a lot of London properties a 75-80% mortgage then would easily be 33% or so today

existentialmoment · 05/10/2017 15:53

You could buy a house in London on a 100% mortgage and 6x your salary for that in 2006, so she didn't need to have a high salary or a big deposit for it

Not on an interest only mortgage you couldn't. And I think your figures are off.

Wherearemymarbles · 05/10/2017 15:54

If you have an offset you can do what you like, over or under pay at will.

pullingmyhairout1 · 05/10/2017 16:07

You need to speak to your mortgage lender to confirm the maximum that you are able to overpay per year before you set about doing that. Otherwise you could be having to pay a partial early repayment charge. When your rate is up you are better off going to see an independent mortgage broker to sort out the fact you are on an interest only mortgage when you should be on repayment.

WishfulThanking · 05/10/2017 16:09

OP, as others have pointed out the difference may have been just 1% or so initially.

I'd just be grateful that the interest only mortgage enabled me to own property in London with a large amount of equity, then switch to repayment and chalk it up to experience. You may be getting people berating you on here, but it sounds like you are in a far more comfortable position financially than the rest of us!

Jux · 05/10/2017 16:35

I think if you're old enough to buy a house then you're old enough to check out the figures, and if you choose not to it's on your head. You'd already bought the house and been paying a mortgage for some years. Presumably you're expected to apprise yourself of how those things work at that point, so much pre-knowledge is assumed (reasonably) 3 years later.

Good luck with your complaint, though I think it's a bit ridiculous to complain to a bank because you chose not to ask them any questions.

InvisibleKittenAttack · 05/10/2017 16:36

OP - can I ask why you are still on interest only? If you can afford £1200 a month, why are you not paying anything back?

I definately would have a conversation about repayment mortgage if you don't have any other plan than "sell the property" to clear the debt at the end of the term, which is fine, but rather assumes you will be happy to leave at that point, that you will want a smaller property at the time you sell. (so can clear the debt and use the profit to buy something else outright).

If you can afford that extra £1k, get it paid off the debt.

Fantasticday69 · 05/10/2017 16:38

So the difference was 0.9% op. Hardly a huge difference. Plus taking outer a new fixed rate mortgage would attract arrangement fees etc.
So at the time I think the bank did nothing wrong.
I

Fantasticday69 · 05/10/2017 16:39

I really wouldn't complain op.

Sunbeam18 · 05/10/2017 16:45

I'm confused about how a low value mortgage could cost £1200 per month interest only?

Aridane · 05/10/2017 16:45

Why not, Fantasticday69 - she has nothing to lose other than a bit of time?

Aridane · 05/10/2017 16:49

@BillyDaveysDaughter - yep, am in financial services Wink

Fantasticday69 · 05/10/2017 16:52

Because I personally don't feel the bank did anything wrong and each complaint to the Banking/financial ombudsman costs the bank a lot of money.
Not the ops problem but I think the complaint culture has gone too far.

Nettletheelf · 05/10/2017 17:06

I suspect the OP's question to the bank was, "what mortgage deals do you have that I won't need to pay a fee for".

Most deals come with a cost: a couple of grand upfront. It's where the lender claws back some cash. Otherwise you go onto the SVR.

milliemolliemou · 05/10/2017 17:07

We teach maths in this country but don't you think part of the curriculum could be simple arithmetic/compound interest?

And household budgets?

And legal obligations?

I'm sure there'd be a lot of people who'd kick their feet and forget it, but perhaps a few people might be saved ... and question the 6pc interest rate on student loans when the bank rate is 0.15 or whatever.

Original poster
highlandtime · 05/10/2017 17:08

Thanks everyone for responses. I will make a phone call to the bank and ask to listen to the phone call from 2009, and take it from there. I absolutely take responsibility but I will also seek recourse with the bank if I can. The loss against interest rates is not as astronomical as I first thought.

Existential, not sure where you are going with your posts - are you suggesting I am making this all up?

OP posts: