I've cleared my arrears so why can't I change my rate?

sashysue

3 years ago I found myself in a set of circumstances where I fell into arrears with my mortgage payments. I was on a 2 year fixed rate which finished over a year ago and of course my payment amounts increased to the standard variable rate which made paying off the arrears even harder but we have finally done it :j


Clearly the first thing I wanted to do was to get back onto a fixed rate so as to improve affordability and start putting money away for emergencies etc. I am well aware that remortgaging would be unwise to try for at least 12 months, however my lender has told me that I can't be moved off of the standard variable rate and onto a fixed rate until we have been arrear free for 12 months either. To my mind this is ludicrous! Unless of course they are just hell bent on making as much money out of us as possible? Any advice on how we can lower the payments would be greatly appreciated. Thanks

chanz4

change lender if thats their policy

Thrugelmir

sashysue wrote: »

Unless of course they are just hell bent on making as much money out of us as possible?

Not a cost free service to the lender administering accounts in arrears.

They now wish to see that you are capable of conducting your account in the proper manner. 12 months in this context seems a reasonable period of time.

You'll struggle to find any alternative lenders at competitive rates with your current credit file history.

sashysue

But surely, the fact that I am trying to make sure that the repayments are at a manageable level for me and my family is all part of conducting my account in the proper manner? At the moment, the interest rate could rocket, making affordability impossible and I could potentially fall into arrears again through no fault of my own.
As for the cost to them, they add fees and interest onto the balance to cover these costs.

k3lvc

sashysue wrote: »

At the moment, the interest rate could rocket, making affordability impossible and I could potentially fall into arrears again through no fault of my own.

But this IS your responsibility - if you can't afford to live in the property then something needs to give. Surely it's not up to the mortgage lender to subsidise your situation

Thrugelmir

sashysue wrote: »

But surely, the fact that I am trying to make sure that the repayments are at a manageable level for me and my family is all part of conducting my account in the proper manner? At the moment, the interest rate could rocket, making affordability impossible and I could potentially fall into arrears again through no fault of my own.
As for the cost to them, they add fees and interest onto the balance to cover these costs.

The higher rate of interest on the SVR reflects the higher risk to the lender.

The lender has no control over how and where you spend your money. If you are potentially struggling while interest rates are at record lows. Then it's highly probably that you will be in financial difficulty again at some point in the future.

sashysue

k3lvc wrote: »

But this IS your responsibility - if you can't afford to live in the property then something needs to give. Surely it's not up to the mortgage lender to subsidise your situation

I never said that I can't afford it as it stands and the interest rate would have to go very badly wrong to cause an issue for me personally. I do however object to mortgage lenders making things difficult for people for an extended period when they have cleared the debt. Having investigated current deals thoroughly, I am aware that by keeping me on the standard variable rate, I am paying roughly £200 more a month than I would be on a fixed rate deal.
To me this isn't a "test" to see how well I can manage money, I am being penalised for something that happened 3 years ago that was entirely out of my hands and that has taken the duration to recover from.

mrginge

Advice was given in post #2
You can't force a lender to offer you another deal if they don't want you.
You may well have a point that they are making it difficult for you. That's because they probably don't want your business any more.
Go elsewhere.

k3lvc

sashysue wrote: »

I never said that I can't afford it as it stands and the interest rate would have to go very badly wrong to cause an issue for me personally. I do however object to mortgage lenders making things difficult for people for an extended period when they have cleared the debt. Having investigated current deals thoroughly, I am aware that by keeping me on the standard variable rate, I am paying roughly £200 more a month than I would be on a fixed rate deal.
To me this isn't a "test" to see how well I can manage money, I am being penalised for something that happened 3 years ago that was entirely out of my hands and that has taken the duration to recover from.

You have your opinion - the mortgage lender will have theirs and unfortunately if you want to use their money you play by their rules. I would have thought that 12 months at SVR is a small price to pay particularly if you've currently got spare money - look at investing this and offsetting the interest rate difference.

amnblog

You have proven you are a poor bet to the Lender.

That is why they are not of a mind to offer you products that are:

1. Less profitable for them
2. Likely to keep you on their books

There are a business.

Thrugelmir

sashysue wrote: »

I do however object to mortgage lenders making things difficult for people for an extended period when they have cleared the debt.

12 months is not an extended period in the context of the term of an average mortgage.

The root cause of most peoples financial problems is that they have no emergency savings to carry them through times of financial distress. Instead living to pay day to pay day.

Your lender has maintained a relationship while allowing you to clear the arrears. Now it's your turn to demonstrate that matters are back under control.

If higher interest rates are likely to cause you distress. Then you need to think through what options are available to you in the longer term. If making savings from your existing budget will be difficult.