Halifax - Are they right?

Stonybrokelady

My husband and I have held several mortgages consecutively with the Halifax over 25 years. Our current fixed-rate mortgage was taken out in August 2008 as our first fix on the property came to an end, just before rates started to slide. Foolishly - very foolishly - we committed to a 6.1% five year fix on a mortgage of £485,000 - I had been avidly reading the financial news and believed the writers who said that interest rates could go sky high. At the time we could afford the repayments of over £3000 per month but subsequently both my husband and I have been made redundant and although we both have new jobs, our salaries have been reduced considerably. As a result of this we had to move to an interest-only basis as we were drowning with the monthly payments on the repayment-basis. The mortgage now costs us £2465.00 per month and all we are doing is paying 'rent' on our home as we are unable to make any inroads into the capital. Although it is very easy to be wise with hindsight, it is still utterly infuriating to see that had we waited and just gone on to the Halifax's SVR rather than go for the fix, a repayment mortgage would be costing us the same as the current interest-only payment. This is now causing us huge anxiety and stress and as a result my sister offered to lend us the money to repay the redemption penalty of £19,000 on the current fixed rate. I went to see the Halifax about this recently and was told that:

a. Even if we did repay the redemption penalty we would STILL have to move onto another product and could not go on to the SVR.
b. But they wouldn't offer us another product as our credit rating was no longer good enough.
c. The Halifax mortgage advisor then said that therefore our only option was to sell or to stick with the current deal. He said that our credit rating (which had been perfect for years) had been damaged by our perceived 'overexposure to financial risk' which meant that our chances of remortgaging with another company were 'virtually nil' particularly as this was combined with the slide in the value of our property which meant we only had a 15% deposit left in it once the Halifax mortgage was repaid.
d. The worst aspect of all was the Halifax advisor was utterly rude and condescending. He had a trainee mortgage advisor in the room with him and at one stage turned to him and said, 'Ms xxxx and her husband are now high-risk customers who we normally prefer not to lend to.' I left the building feeling utterly humiliated and belittled but although I would normally challenge such disgraceful rudeness, I am so exhausted by our financial situation that I was afraid that if I did tackle him he might somehow make things 'difficult' for us with our current borrowing. Probably foolish of me I know, but these people have considerable power.

Can any one advise me if the Halifax can MAKE us go on to another deal rather than move to their SVR? I suspect that we are just going to have to grit our teeth until the fix is over, but have a horrible feeling that interest rates will have started to rise just as it comes to an end in three years time , meaning that we will have totally missed the opportunity to reduce our capital debt on the house that this era of long interest rates provides. Please don't tell us to sell the house - we have contemplated it as we are now so desperate, but it is the specially adapted family home of our severely disabled son and we simply won't sell.

I would so appreciate any advice. Just wish I hadn't gone for that five year fix!

opinions4u

You can't go on to SVR until your product has expired.

You can buy out of a product by paying the ERC. But only to go on to another product or to another lender.

I think that was the question!

InMyDreams

Stonybrokelady wrote: »

Foolishly - very foolishly - we committed to a 6.1% five year fix on a mortgage of £485,000 - I had been avidly reading the financial news and believed the writers who said that interest rates could go sky high.

For what it's worth, I don't think you were foolish at all. Don't beat yourself up. The interest rates could have gone sky high and then if you hadn't have fixed, you would have been in an even worse situation than you are now. It sounds like you made a sensible decision with the information you had at the time, protecting yourself from even worse.

Unfortunately, that sensible decision came at a price, but it sounds like you were not in the position to take the risks of a variable rate at the time (and still aren't).

I do sympathise though... I'm also 2.5 years into a 5 year fix. I just try not to think about what I would be paying if I wasn't fixed and remember the reasons I took out the fix in the first place... all of which are still valid. If interest rates shoot up as quickly and unexpectedly as they plummeted, we'll be the ones laughing then.

My advice is that you have a wander over to the debt-free wannabe board and post a SOA to see if there is any way you can reduce your other outgoings.