Mortgage Interest Rise AGAIN !!! Advice Needed Please.

Conrad

dunstonh wrote: »

With respect, I dont think that is a thing you can complain about. What if rates had gone down. Would there then be grounds for complaint that the fixed rates were higher than the discounted?

The complaints process is for mis-sales. It isnt for getting a decision wrong with hindsight when the future is unknown.

The FSA principle again; ADVISERS MUST MAKE THE RECOMMENDATION THAT IS MOST SUITABLE GIVEN ALL THE CLIENTS NEEDS.

1) The OP is with Kensington so I've assumed there was some adverse credit history

2) People who have had a history of being unable to meet creidt committments are THE most vulnerable - SO AGAIN, BACK TO WHAT IS THE MOST SUITABLE COURSE OF ACTION?

Is it
a) A variable rate
b) A fixed rate - giving peace of mind and setting a clearly defined payment level

The Financial Ombudsman Service will find in favour of the complainant.

You cannot recommend a variable rate to such a client in the blind hope rates might fall. Especially gievn the fact rates were historically so low at outset.

Conrad

TO THE OP, HERE ARE THE SOME OF THE '6 OUTCOMES' THAT MUST FLOW FROM 'TREATING CUSTOMERS FAIRLY' THE FSA INTRODUCED - I quote from from thier own manual;

1) Consumers can be confident that they are dealing with firms where the fair treatment of customers is central to the corporate culture

2) Poroducts and services marketed and SOLD in the retail market are designed to meet the needs of identified consumer groups AND ARE TARGETED ACCORDINGLY (do you think a variable rate was designed to be sold to you?)

4) Where customers recieve advice, the advice is suitable and takes account of thier circumstances.


So you decided whether the product was suitable given your needs, if you think it was, fair enough, Im just trying to help is all.

MarkyMarkD

I think your views are rather extreme, Conrad.

Whilst you cannot logically recommend a higher variable rate than a lower fixed rate to someone credit impaired, you can certainly recommend a LOWER variable rate in such circumstances - and that may well have been the case.

It could be that the individual couldn't afford the repayments based on the higher fixed rate - in which case recommending a fixed rate would be pointless.

Your point about product design is silly - there will be customers for whom both fixed and variable rates are suitable at any point in time. So you can't have a go at a lender for designing and offering both.

For all we know, the OP's adviser went through the benefits and risks of fixed and variable rate products and the OP chose variable because the initial payments were lower. Do you really believe that never happens?

delboypass

interest rates are not going to decrease both in terms of the BoE and LIBOR.

Have you seen the UK inflation charts....

If BoE do decide to reduce due to huge wads of people borrowing beyond their limits, inflation will criple UK and the pound...

Unfortunately, i still believe best advice is to sell now before house prices crash..take the profit from a rising market..

As said before, only on interest only with no repayment vehicle.

Switching to a longer morgage means she will only be forced to pay more over a longer period of time and from a morgage calculator it doesnt even change that much moving from a 25 to 30 year morgage (which i would consider subprime)..but overall payments radically increase.

MarkyMarkD

There's nothing "subprime" about a 30 year repayment period. It's up to a borrower how long they want to repay over.

"Subprime" refers to the credit history of the borrower, not their ability to pay over a short period.

delboypass

MarkyMarkD wrote: »

There's nothing "subprime" about a 30 year repayment period. It's up to a borrower how long they want to repay over.

"Subprime" refers to the credit history of the borrower, not their ability to pay over a short period.

Of course its subprime in relation to the ability of the borrower to repay the required loan.

The borrower is unable to repay the loan over the traditional 25 year period so instead for the borrower to be able to repay the morgage length is extended to 30 years to lower the repayments allowing the loan to be given to the borrower. Hence reduced ability to repay the loan which would fall within subprime 30 year morgages only introduced to keep property bubble inflated.

I dont think anyone should take out 30 year morgages.

In respect though an Interest only morgage is a lifetime loan as no repyament vehicle associated so like renting from the bank as you will never own the house outright.

dunstonh

sub prime has nothing to do with timescale. All the mainstream lenders are doing 30,35 and even 40 year mortgages.

In the past people did 25 year mortgages and then moved house after say 7 years and would reset back to 25 years again and maybe move again reseting each time. So, the 25 year thing was a bit a fake anyway as many went (and will go) well beyond that in the long run.

MarkyMarkD

You're welcome to believe that, but it doesn't make it true, delboypass. Just because a "traditional" mortgage was 25 years long doesn't mean that is a magical length of time.