Fixed rate 10yr mortgage 6.59%

Thrugelmir

pathtofreedom wrote: »

People who remortgage every 2 years might be on a lower rate than you currently, but each time they are paying for valuations, solicitors and maybe setup fee's. All of that can add up so your 6% once you factor no remortage costs probably isn't as bad a deal as you first think.

A point worth stressing. As far too often gets overlooked.

fewcloudy

Thrugelmir wrote: »

To put your mind at rest. Your lender is making the same margin out of you now as was the case 6 years ago. You fixed your rate. Correspondingly the bank borrowed the money at a fixed rate to match. Banks aren't in the business of speculating on mortgage books. Locking rates guarantees the return on the lending margin. Mortgage lending is at best around 1% gross margin.

The ERC is to protect the lender from losing money. If interest rates rose you would be extremely unhappy if they broke the contract. Works both ways...

Interesting information Thrugelmir. Now I don't feel so bad about being on a lifetime tracker at 1.49%, if the bank borrowed the money they lent me at the same rate...

Makes their behaviour of trying to find hidden clauses to get out of these deals even more puzzling.

fc

JimmyTheWig

If the 10 year fix was such a bad product 6 years ago (without the benefit of hindsight) then no-one would have taken it and the bank wouldn't have bothered offering it.
Or, more relevantly, another bank would have come in with a slightly lower 10 year fix (still making loads of money, if the one you got was such a bad product) and scooped up all the business.
But neither of those were the case, so we can assume that the 10 year fix was a reasonable product at the time.

You _could_ argue that with wage freezes and other prices rising, what a peace of mind you've had knowing that your mortgage interest rate won't go up.

Obviously we all know that in hindsight it wasn't such a great thing to go for. But your reasons were valid and it is reasonable to assume that your broker chose a decent product for someone with your outlook.
So give up on the "misselling" angle.

You now have three options...
1. Carry on paying the fixed rate for the remaining 4 years [whilst overpaying as much as you can without penalty]
2. Speak to Halifax and switch to a new product, taking the hit of the ERCs
3. Remortgage to a different lender, taking the hit of the ERCs

Which of the above is worth doing will depend on a great many factors, the most relevant (all other things being relatively normal) being the amount left to pay on your mortgage.

amnblog

The point I was making was that if you were seeking security by fixing your rate over 10 years - that is what you were provided with.


If that was genuinely not the basis of your conversations with the Adviser - for example, you stated you wanted to benefit if mortgage rates dropped - then that is a different issue.


If you buy an umbrella and it does not rain you cannot pin that on the shopkeeper.

JimmyTheWig

A brilliant analogy, amnblog, I like it.

kingstreet

Sadly, I failed Divination at Brokerwarts.

I could never get the hang of the crystal ball and I was awful with tea leaves, so I dropped it in the third year.

Since then, I've advised clients to choose a fixed rate because they prefer payment certainty and to try to match the fixed term to an aspect of their life they feel might change, like kid going to school, or other event which may affect their income or outgoings.

I've provided a number of ten year fixed rate illustrations and have never been taken up on one. Saying which, I must be a bit of a lousy "advisor" as I've never advised anyone to take a particular fixed rate period.

betmunch

kingstreet wrote: »

Sadly, I failed Divination at Brokerwarts.

Laughed harder than I should have at this!

Ronaldo_Mconaldo

And what happens if he pays the ERC and then takes a variable rate or 2 year rate and interest rates shoot up in the next 3 or 4 years? Complaining about that too.

pinkteapot

abbeywindows wrote: »

Yep, that's correct and let's get it out of the way, I now know it wasn't the best decision I ever made. However we signed up around 6yrs ago (looking like conservatives coming into power = presumed high interest rates) and having a family I wanted to have a balanced payment each month.

You can't claim mis-selling when you knew exactly what you were getting and had logical reasons for choosing the product over a different one. It would never have been a goer anyway, but the bit in bold really kills it.

Thrugelmir

fewcloudy wrote: »

Makes their behaviour of trying to find hidden clauses to get out of these deals even more puzzling.

fc

What deals?