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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:
Someonessnackbitch · 06/10/2017 18:07

Sorry if this has all been said but you were mislead as all options should have been in great detail. The banks are supposed to benefit customers not themselves. There is the financial ombudsman and also the FCA. But.... I might be wrong but I think you only have 5 years to complain about these kind of things.

Loubilou09 · 06/10/2017 18:08

Spare change the absolutely irony of your next post about reading the thread is hilarious!!! The OP had said she is overpaying - where on earth do you think this money is going my dear?

Loubilou09 · 06/10/2017 18:10

Jesus I see Sparechange is still being smug and sanctimonious even when getting it completely wrong!!!

CottonSock · 06/10/2017 18:11

Can't you switch to a repayment deal now before rates go up?

Chewbecca · 06/10/2017 18:12

The SVR you were offered in 2009 should have gone down over the last 8 years too, Barclays SVR is currently 3.74% or 3.49% depending on the product. So a reduction from that to just over 1% making a £1k pm reduction must be on a huge mortgage?

Plus fixed rates usually incur a fee that you need to take into account.

Chewbecca · 06/10/2017 18:14

None of the main banks have an SVR of 5% now as far as I can tell?

Ambonsai · 06/10/2017 18:15

www.google.co.uk/amp/s/www.moneysavingexpert.com/news/mortgages/2014/11/on-a-mortgage-lenders-svr-check-youre-not-paying-too-much/amp

In 2006 I had to go to the library to get the 'internet'
OP- you might not have been eligible for another rate. The housing market was in disarray in 2009, all the rules were changing.
And who knows you might have taken out a fixed rate for 10 years at 6%!
I'd just keep paying £1200 overpayments on your new deal.

Cupoteap · 06/10/2017 18:17

She would need to read her contract to say where overpayments were being allocated.

AnnoyedinJanuary · 06/10/2017 18:19

This is why basic financial management should be taught in schools! People don't understand how mortgages work. A few things here: I do feel the bank should have told you about all the rates which were available - it's not up to them to provide advice to you but they should have told you about what other options were available. That said - I'm not sure where you've been living for the past 8 years - you need to pay attention to what's happening in the market - reduction of the base rate etc which means the banks rates also have been lowered. Plus as the Bank of England introduced the help to buy scheme in 2012 - banks were forced to reduce rates by the central bank in order to increase lending. The recent reduction in bank rates to the likes of 1% - is as a result of the bank of England reducing rates last year when the shock result of Brexit caused panic in the markets. So you wouldn't have got 1% back in 2009 - as at that point the banks had cottoned on to the low base rate and were not reducing their rates accordingly. You would have been better moving mortgages back in 2009 - there is no reward for loyalty in this country - either in the mortgages or insurance market. You need to go on websites like - go compare and money supermarket - as these outline the most competitive rates across a variety of financial products and their associated hidden costs. You have to take some responsibility for that and also for not being more financially astute. You should never stay with one bank for such a long time - as others will always offer better rates generally. I would also advise you that paying interest only over such a long period on your main residence is a mistake. You have effectively been renting your house from the bank rather than a landlord and if you continue this way - you will not own your house at the end of 25 years. If I understand you correctly you have for 11 years not paid a penny off your mortgage. You need to make capital repayments and quick - just check how much you're allowed to repay annually - some banks limit you to 10%. If that is the case - put money in your savings account and when rates go up - perhaps shop around and use those savings to bring down your loan to value so you get a better rate. Rates will go up - unlike Britbat23 - I don't believe they will ever go back up to 5% - the economy will not be able to take that - it will have enough problems managing the crisis which Brexit will bring - but they will go up - probably v slowly - so be prepared for that. And if do you re-mortgage to a fixed rate with a new bank make sure you only go for a fixed fee of £1500 or less - never go for a percentage of your mortgage - that's a con. Also if one rate has a lower rate but a bigger fee - average that fee over the lifetime of your mortgage (which will only ever be 2-5 years max) and add that to your monthly repayments for comparison purposes. If you need to understand more about mortgages am happy to help - message me. Your 1% rate is probably tagged to the base rate - so when that goes up - so will your repayments. I do feel the bank should have told you - but the question you should have asked was - is that the best rate which is available to me with your bank? - if you asked that and they fobbed you off then some responsibility lies with them! But it will be so hard to prove. As a first port of call I would ask for the phone records if they still have them. At the very least - I would complain massively - technically they have a duty of care to tell you a variety of rates available to you - so there may be some conduct issues there! I feel so sorry for you. But you sound as if you are still v young - so make up for it now by making capital repayments. Remember the closer you get to 65 - the more your term reduces if you ever need to move the mortgage.

HaudYerWheeshtBawbag · 06/10/2017 18:23

Its not the banks responsibility to give you, your payment options, back then, mortgage advisers where free and easily accessible. Rates also weren't 1% in 2006 and 2009, theyve only been at this rate for the last 2 years.

I think anyone who is taking out a mortgage needs to be money wise, I fail to see how its anyone's responsability other than yourselves, you should always know what your signing before putting pen on the paper.

Jessikita · 06/10/2017 18:25

I can’t believe you were that daft to take your bank’s word for it and accept that ridiculous interest rate!

Haven’t you seen the news in the last about 8 years saying mortgage and interests rates are at an all time low etc?

Don’t you get a yearly statement with a summary of your interest rate?

Haven’t you heard of Martin Lewis?

Don’t you use moneysavingexpert.com?

It always amazes me that even in the days of the internet there’s people that remain as financially stupid as you appear to be!

Is this a troll post?

(Sorry I just can’t believe it!)

OlennasWimple · 06/10/2017 18:26

Do banks really have recordings of phone calls from 17 years ago..? Wow!

Ambonsai · 06/10/2017 18:27

You can make overpayments on an interest only mortgage ( if it's in that particular mortgages rules) but that's not what the OP has been doing. You can phone up your bank at anytime and ask to make a payment, but if it's not allowed then there could be penalties.
If you wanted to make overpayments you would ask to reduce the capital rather than the interest owed. (Then the interest would decrease too) if allowed.

The interest payments increased because she had a variable rate. The bank took those payments as interest on the original capital, they can't apply it to the original capital.

cherrybath · 06/10/2017 18:27

I agree with Ermm - your loan to value ratio would have been much higher at that time, and it was pretty difficult to sell houses then so lenders tended to be very cautious in case of defaults. Rates did vary with income levels and credit ratings, but if the rates you were offered were so similar it is hard to know how they misled you - you chose between the two rates that you were offered and they were under no obligation to suggest that you switch at a later date.

RideOn · 06/10/2017 18:40

*Loubilou09 Fri 06-Oct-17 18:08:28

Spare change the absolutely irony of your next post about reading the thread is hilarious!!! The OP had said she is overpaying - where on earth do you think this money is going my dear?*

I don't understand - OP said she rang the bank "today" which was 5/10/17 so she hasn't had a chance to repay anything yet.

treaclesoda · 06/10/2017 18:40

If you wanted to make overpayments you would ask to reduce the capital rather than the interest owed. (Then the interest would decrease too) if allowed.

An overpayment will automatically be allocated towards the capital because there's nowhere else for it to go once you have paid the interest charged.

Ambonsai · 06/10/2017 18:43

Yes that's what I said. Someone asked about overpaying the interest

scottishretreat · 06/10/2017 18:44

I reckon they should have clearly warned you that they were not giving you independent advice, but only suggesting one oftheir own products, see 'restricted advice' at the bottom of:
www.fca.org.uk/firms/independent-and-restricted-advice

I'd try telling them that you don't thin they did that - then the onus is on them to prove somehow that they did.

treaclesoda · 06/10/2017 18:45

Sorry, I misunderstood your post. I thought you meant you would have to specifically ask for it to be allocated towards paying back the capital.

scottishretreat · 06/10/2017 18:46

Do banks really have recordings of phone calls from 17 years ago..? Wow!

Not sure, but this call was 2009, so 8 years ago...

MortgageDiva · 06/10/2017 18:53

This reply has been deleted

Message deleted by MNHQ. Here's a link to our Talk Guidelines.

sallyfox · 06/10/2017 19:01

if it's an interest only mortgage, change to repayment immediately

JournalistEmily · 06/10/2017 19:03

I’m surprised that in all the time you have owned a house you haven’t once looked into this. I’m afraid it’s not the bank’s responsibility to choose a deal for you: it’s yours. You should have spoken to a broker. And it looks like you should speak to one now as well as interest only mortgages are madness. It’s essentially no different to renting.

PicturesJane · 06/10/2017 19:11

Oh god I need to sort my mortgage out .. am in same position I think .. have never changed my lender and still paying £700 on an interest only on an initial mortgage of £156k which i took out over ten years ago

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