Locked in

Cashstraped

In 2008 we locked into a 10 year mortgage with the Nationwide. They refused to allow us another deal and told us if we go elsewhere we will not be allowed to come back. NW customers since 1975. Is this ethical / allowed?

elantan

Well tbh you have to take responsibility for allowing yourself to be locked in, not to worry 3 years or so left to go

Goldiegirl

They can lend to who they want to - being customers since 1975 isn't a guarantee of getting a mortgage, unfortunately.


Maybe what they are trying to tell you is that if you reapplied to them you'd unlikely to be accepted due to other factors such as income or credit-scoring?

edinburgher

Some fair points raised already.

Ethical? Well, the longer you wish to repay a debt over, the higher the risk to the lender and the higher the premium they are able to charge to offset this risk. It's a fairly standard concept in the world of finance.

You may not view it as fair (as opposed to ethical), but consider a different scenario. If interest rates rose significantly, would you be willing to pay more interest despite having fixed at a lower rate? Of course you wouldn't!

I think this is a wee bit like wanting to have your cake and eat it, too

I do not understand why people are willing to fix for such long periods apart from media scare stories, sorry you have had to learn an expensive lesson. I have relatives who were in a similar position - they fixed for 5 years and interest rates fell through the floor the following year.

As for the legality 'are they allowed?', you've signed a contract, so they can do whatever the contract states.

Try and think about it in a positive light - OPing at the higher rate saves you more money in real terms

pathtofreedom

You need to read the contracts you signed really to know what you were agreeing to. They can't not let you leave if you can find a better deal to remortgage too, BUT there will no doubt be fines built into the contract if you leave before the 10 years are up.

So you have to weigh up the fines, solicitor costs, any valuation / setup fee costs for a new mortgage with a lower apr. Or just think of it that your rate might be higher than the deals you see today, but you haven't had those costs every 2 /3/5 years so it probably averages out to be the same anyway. The 10 year fix at some point was also affordable to you, and that peace of mind comes at a cost of not having the worry of changing payments.

If you've been a customer since 1975 as well is that since you're a child, as depending how long you need the new term to be, you might only be able to get a shorter term depending on your retirement age. If you have had it since you're a baby then ignore me and just read up on these forums a lot to see how switching bank accounts (you don't have to close it if you don't want to) might be benefical to you.

Also check in your contract if you can do overpayments, and by how much per year, as they soon add up and depending how much you have left you could save thousands in interest if you are on a much higher rate than you could get from savings / investments. Also have a read up on MMR and the new mortgage rules to see if you'd meet the afordabilty criteria now, or would you in 3 years or how to improve your chances.