Heavily out of pocket because of mortgage change to Halifax

LeOn_3

We bought our new home for £135,000 in November 2005, we borrowed £115,000 we had a self cert mortgage as I am a tennis coach and was newly self employed.

Our lender was Kensington homeloans (now Oakwood Homeloans). Details of the mortgage were a discount rate of 5.75% for the first year, rates at that time were around 7%.

After the 1st year it was to return to Kensington's base rate which was 2% above the Bank of Englands rate. After the first 12 months we found ourselves in a postion where Kensingtons rates were steadily climbing to a point where it reached 8.75%, which made our payments £970.

We have always banked with Halifax and on one visit into the branch they asked if we would like to have a mortgage review with the advisor who advised us that we could make a huge saving on our mortgage payments with one of their deals which was fixed at 5.9% for 5 years. This would leave us to incurr a redemption fee just short of £7000.

We took the offer and then unfortunately for us the bank of England rates dropped steadily. We have been paying £690 for almost 3 years with Halifax, if we would have stayed with Kensington based on the interest rates we would have been paying around £300.

With the redemption fee plus the higher mortgage payments with halifax over the last 3 years we are not out of pocket by £22,000.

Now this may be that we have been just unlucky but wonder if anyone out there knows if we have infact received bad mortgage advice from Halifax to switch to them??

Thanks in advance

Leon & Suzy

_Andy_

Not at all - no-one knew what would happen to rates. It was your choice to move and frankly paying £7k to do so wasn't a good idea to begin with.

LeOn_3

Thanks Andy for your reply, we contacted Kensington Mortages to see what they would say, and they suggested that Halifax gave us bad advice to redeem the mortgage, this is what has set us on this path to see how we stand legally.

alexlyne

Hindsight is 20/20 eh. We're on a fix at the moment... and I've been watching rates drop and drop while our payments haven't changed.. then when the fix does drop off, the rates start going back up again (or maybe they will)... It's the problem with fixes. But, to be fair, you're better off paying over the odds with a fix then coming off and paying less, rather than getting a good low fix, then coming off to horrendous rates!

I wouldnt necessarily say that it was Halifax's fault that you took the decision you did... but then again it's sometimes difficult to think back to the day, and whether they recommended a particular action, or said 'you'll be £300 per month better off with us*, but it's your choice'. I think it comes down to the KFI - don't they state they are giving advice, or a particular recommendation? As Andy said, no one knew such a rate cut was coming. (and, my recent contact with them resulted in 2 options... and they won't tell me what they think is best because they don't know)

(* when you factor your 7k in over 5years, the actual saving compared to your top of the market rate is obviously less than 300 per month)

jockosjungle

Retrospectively they gave you bad advice, in fact they didn't even do that. The truth was you saved money with the Halifax in the short term, you'e very unlucky but don't think you have a claim based on that Halifax had a crystal ball somewhere and knew the future

R

MrsManda

Unless Halifax specifically stated you would definitely be better off with them I don't see how you can claim they gave you bad advice. All our mortgage documents from when we saw an advisor at our bank state that they are not giving formal advice on what is best for you, they are just offering you options with their bank.
And as Andy said, no one knew what the rates were going to do which is precisely why people get fixed rate mortgages.

beecher2

Legally, you don't have a leg to stand on. You made the decision to take out the fixed rate and Halifax wouldn't have forced you into taking the deal. They would've explained the options available to you and left you to make the decision. At the time it probably looked as if it'd pay off, but now it doesn't - such is life. If interest rates go up again in the next 2 years, you may be thankful to be on your rate.

FraudBuster

Three years ago nobody in the country would have predicted that the base rate would be at 0.5%

LeOn_3

Thanks again everyone.

Just to state the Halifax representaive DID say that we would be better off with them as they were a high street lender and Kensington were not.

Cheers LeOn

LeOn_3

Just another thing also that may help us recoupe some money back is that we have a choice to stay fixed on 5.9% for a further 5 years once the first 5 years are up (10 in all)


It may come good

LeOn

opinions4u

LeOn wrote: »

Thanks again everyone.

Just to state the Halifax representaive DID say that we would be better off with them as they were a high street lender and Kensington were not.

Cheers LeOn

If the Kensington rate was 8.75% and the Halifax rate was 5.9%, then you would have saved not far short of £4,000 a year for the period of time that the rate differential existed.

You have also benefited from a guaranteed mortgage payment by fixing. Given that you were concerned by rising rates with Kensington, recommending a fixed rate mortgage seems like sensible advice.

Buying a fixed mortgage just before rates start tumbling doesn't mean that you have been poorly advised.

A high proportion of Kensington customers have poor credit histories. If you fall in to that category, a fixed rate mortgage may be ideal to help you to manage your money better.

What fixed rate were Kensington offering when you took the Halifax 5.9%? That's the key comparison to see if you were poorly advised or not.