Mortgage woes - is this fair?

I have 2 fixed rate mortgages (main and top up) due to end their fixed period in November next year, and I'm terrified what the rates will be by then. I'd like to discuss options, if any exist, with mtg provider but trying to get through is impossible.

Seems unfair.
But my experience is the banks are often unreasonable (and the regulation of them shiiite by the weak willed disinterested regulator).

We were in the stupid position recently they'd not re-mortgage us onto a fixed rate that was LOWER than the std rate, as it was 'unaffordable to us'. Which of course was utter fhlecking boloxy sh'hhiiite given we had 20 years of never missing a mortgage payment and were affording the current variable one no problem.

If you agreed the new fixed rate in Aug, it is probably now being sold below cost, so you can see why they're in no hurry to offer to lend you more money at that rate.

I would say unfortunate rather than unfair.

I think you have to ask if it's reasonable rather than fair.

Any excuse not to offer another fixed rate right now. Who can blame them.

Any excuse not to offer another fixed rate right now. Who can blame them.

Especially one agreed three months ago!

We intend to make no changes to the rate agreed for Part 1 back in August as that's obviously better than todays rate.

We just want to end the current deal on part 2 (pay the ERC) and fix at todays rate.

Apparently their systems wont allow them to amend the deal on Part 2 whilst there is a new deal waiting to kick in from 1st Dec with Part 1.

Feels like a "computer says no" thing rather than something that has any logic.

Feels like a “computer says no” thing rather than something that has any logic.

In which case, that's just how it is. Unfortunate.

Well they should change their systems then as it's giving a very poor customer outcome. "Computer says no" shouldn't be a valid excuse

Think you'll find most financial companies not offering anything unless they're legally bound due to the complete unknown state of the market just now, the next year or so will be carnage in the housing and credit markets, we haven't even seen them stressed and there's already panic.

Make a complaint in writing, make it very clear that you are alleging dissatisfaction and financial loss. Maybe work out the difference between current fixed rate you'd take and their SVR. Then if they don't agree they've done anything wrong take it to the FOS.
It's very easy to remediate accounts, even after the occurrence.

Do you have to have the second part with them.

If not you could look elsewhere. E.g. lapse and move or if the other lender will let you, take a 3rd mortgage, invest the money and then use it to pay off and not renew the 2nd one… So back down to two after a short period. No idea how feasible or sensible but might get you a fixed rate - take some financial advice first etc.

Thanks guys,

@jekkl - I've already started that ball rolling and will be happy to take it to the ombudsman. I've worked in banking for 15+ years so fortunately I'm pretty familiar with that side of things. I was just shocked that a limitation of their system would potentially impact me financially. If my organisation had a limitation like that we'd be all over it.

In the meantime we've been put in contact with a recommended mortgage broker and have a meeting arranged early next week.

I just wanted to check it wasn't me expecting something unreasonable. I guess if their fixed rates don't increase between now and 1st Dec then we'll be no worse off but that doesn't stop us worrying about it for the next couple of months. Perhaps we just need to move the 2nd part to another Lender.

Well they should change their systems then as it’s giving a very poor customer outcome. “Computer says no” shouldn’t be a valid excuse

Have you any idea how much that sort of thing costs?

Unless it's affecting a large % of daily business there's no business case whatsoever to change things.

Well they should change their systems then as it’s giving a very poor customer outcome.

It's their party, if you don't like the music then go to another one - but don't be surprised if their playlist doesn't suit you either.

There's a lot of people who forget that mortgage companies are businesses.

@footflaps - depends if they want a full blown system change or a simple workaround. The latter would probably suffice if it’s a relatively small number of impacted customers. All they need to do is retrospectively update part 2 of the mortgage after 1st Dec if their system restraints prevent them from doing it now.

@sharkbait - I’m well aware they are a business. Like I said, banking has paid my wages for the last 15 years.

I don’t think my expectations are unreasonable. If someone can explain why what they are saying is fair then Id be keen to know where I’m getting it wrong. Perhaps they don’t value fairness. In which case I’ll be better going somewhere that does.

My fixed rate runs out in March. I'm F***ed.

We were in the stupid position recently they’d not re-mortgage us onto a fixed rate that was LOWER than the std rate, as it was ‘unaffordable to us’. Which of course was utter fhlecking boloxy sh’hhiiite given we had 20 years of never missing a mortgage payment and were affording the current variable one no problem.

Santander did that my my father in law and it wasn't an insignificant difference.

Sounds like you have had excellent luck with your pt1 fix. Less so with your pt2 fix, but fixing on December 1st is unlikely to be disastrous. In the meantime they may come up with a workaround if you are politely persistent. It's a bit of a chaotic time in the industry.

If you honestly feel like pulling out of both as a point of principle, paying early repayment fees and fixing your entire mortgage at a worse rate...

Part 1 will definitely be staying with them as I won't get near the rate I've already secured anywhere else. Part 2 may not be staying with them unless they align with my request.

What they're basically saying is I can re-mortgage the whole lot at todays rate on the basis that I forfeit the rate I secured on Part 1 in August. Erm no thanks! They're two different products! Crazy to think I may have to move Part 2 elsewhere because of a silly system restraint.

I've had a formal acknowledgement of my complaint via e-mail so I'll see where it leads when they contact me for a chat next week. I can't fault the lady I spoke to earlier today. Very empathetic but if the system wouldn't let her it wouldn't let her.... I'm certainly not someone who likes to kick up a fuss, at the end of the day they're only doing their job and I respect that but sometimes somebody needs to challenge the red tape and by doing so I might save others from the same stress.

I think you have the right to be cheesed off. Part one and two are separate so 1 should be secure as agreed. if your agreement lets you end 2 early for a fee then that should be honoured and you should then be free to arrange what ever is available for 2. I'd be shopping elsewhere.

Our fixed ends in April 2024 so my fingers are crossed but the planned extension has been canned. Bah!

You won't be able to move the second part to another lender as easily as you think as that lender will have to take 2nd charge.

When you speak to a person, remind them that they are obligated to treat their customers fairly and ask them if they truly believe they are doing so in this instance, if not the FCA will take a view on it...

If someone can explain why what they are saying is fair

I think looking for 'fairness' from a bank/mortgage provider is probably the issue here.

This does sound questionable. As per some of advice above you can’t split loan part on a single mortgage between different providers. You’re also volunteering to pay the ERC which is the early exit penalty on loan part 2 . Bank legacy systems can often cause issues but should not to this extent. Double check your offer and ESIS for specific terms on the loan part but not normally a block if you pay ERC if it’s just a standard product and not something unusual. Hope that helps

Sounds to me like they just don’t want the business from part 2, at least not at the rate you’ve got agreed with part 1. As you say, they are two different products so surely they are not obliged to give you the same lower rate on part two? If it’s bad business for them why would they? Not sure that is any different to your reaction when they offered to let you re-mortgage the whole lot at todays rate.

@tonyd I think you’ve misunderstood. I’m not asking them to honour the same rate on part 2. I want to pay the ERC and agree a deal at todays rate on part 2 but they’re saying I can’t unless I forfeit the rate I agreed in August on Part 1.

I’ll remind them of the relevant regs when I speak to them again next week

Ah I see, apologies. In that case yes, seems a little unreasonable to me.

On the basis they can't actually stop you paying it off early, why not just do that?

Or do you actually mean, you want them to lend you money, at a probable loss, so you can pay off the loan that you already have with them knowing that's now also probably making them a loss?

I was just shocked that a limitation of their system would potentially impact me financially. If my organisation had a limitation like that we’d be all over it.

So your organisation would be in a hurry to make a loss in order to keep your customer happy? Nonsense. If your company had a limitation that stopped them losing money but upset some customers they'd not be all over fixing it. Choosing themselves and their share holders over you is not an accident, it's deliberate.

If someone can explain why what they are saying is fair then Id be keen to know where I’m getting it wrong.

You gambled on a five year fix instead of a ten or a three or SVR. You're now losing your bet. What you're asking is for the bank to not only allow you to win but also to pay for you to beat them. It's not only fair they say no, it's perfectly reasonable.

Put your toys back in your pram. Take out another product with another lender.

@dangeourbrain - I don’t think you’ve understood.

Part 1 and Part 2 and two separate products.

Part 1 will be fixed on a rate agreed in August that kicks in on 1st December. I don’t want to touch this.

Part 2 is currently on 1.77% until December 2023.

I’m wanting to repay Part 2 today. Pay nearly £3,000 ERC and replace it with a new 5 year fixed at 5.6%.

Why would they be lending me new money at a loss when I want the rate they’re offering today? They’ll be quids in if they let me do what I’m asking. In return I get the peace of mind of a fixed rate for 5 years on Part 2.

I think dangerbrain has it.

Boiling it down the issue is they won’t issue you a new mortgage today so that you can use that to pay off an existing mortgage with them.

However, I’m not sure any lender is under any obligation to give you a loan.

Feels like a lot of parallels with a lot of people who are mortgage “prisoners “ who want to move off a svr to a new deal with the same lender but can’t because for whatever reason they now don’t meet affordability criteria of the new deal even though paradoxically the new deal would be cheaper for them and with the same lender.

Certainly feels unfair but I’m guessing you won’t be the first to have complained about this.

I don’t think you’ve understood.

I understand just fine. You're expecting the world to ease your passage through it. I don't think you've understood, that's not the way it works.
"I was just shocked that a limitation of their system would potentially impact me financially."
This is daily life for the vast majority of people. Every time they decide to bill you for an overdraft, bouncing a DD, using a cash machine and so on. That's the bank impacting you financially.
Every time they charge you base rate + that's them impacting you financially. And the more dependent you are on them the more they impact you financially.

Part 1 and Part 2 and two separate products.

Why would they be lending me new money at a loss when I want the rate they’re offering today? They’ll be quids in if they let me do what I’m asking. In return I get the peace of mind of a fixed rate for 5 years on Part 2.

News flash, interest rates are likely to be up by the time your fix on pt 2 ends. But you already know that, that's why you want to fix now not in December next year when, in liklihood you'll be looking at double todays rate.
Sure they're going to lose a bit over the remaining 12 months (or rather 2.5 until pt1 fixes them they will let you deal with pt 2) but lending you money today, is a gamble they're really not convinced they're going to win. They might of course and rates go down in the early part of next year but neither you nor they (nor anyone else for that matter) thinks that's likely. Likelihood is at December's rate, be that this year or next, they'll recoup any losses on your 1.7% running until then. You think that's likely and so do they.
That's why you want to do it and they don't.

That’s pretty much it. They won’t allow me to lend new money today but the reason for this is because the deal on Part 1 hasn’t yet kicked in. They haven’t done any affordability checks against the new money. It’s purely a system limitation that won’t allow them to set up this new product without overwriting the rate that we agreed separately on part 1.

I was told to come back again in December once the new Part 1 deal has kicked in and then they’d explore what I was requesting. Obviously that puts us at risk of further interest rate rises in the next 2 months and it’s this that I’m not comfortable with.

Part 1 and Part 2 shouldn’t have any bearing on one another. They’re separate and should be treated as such?

If someone can explain why what they are saying is fair

It's a business transaction, they offer you a range of services and you pick and choose from what they offer. Or choose to go elsewhere.

The fact they don't offer what you want isn't 'unfair', it's just how it is.

This has to be one of the most 1st world problem threads I've read in a long time...

@footflaps you appear to be out of touch with one of the most heavily regulated sectors in the UK.

If you were told you were unable to apply for a product because of a system limitation would you simply roll over and accept it? Pretty sure the FCA wouldn’t expect you to.

They’re separate and should be treated as such?

So treat them separately.

Pay off part 2.
They can't stop you paying it off.
That just means (assuming you aren't able to do so without borrowing, and if you were, we'd not be having this conversation) going to a different lender.

Stop getting hung up on the fairness or otherwise of it and solve the problem.

I'm not sure I'd be in such a hurry to fix part 2 right now if i was you. A significant hike in interest rates and a £3k exit fee. We dont know what rates will be end of 2023 but they may be no worse than today, could be better. Putin may be out of Ukraine, Liz Truss is likely to be out of office, we could have decided to raise taxes after all. Even if they are still bad the longer term outlook which is what a fixed rate deal is based on may look better.

As others have said welcome to the world of finance, if you think they've broken the rules whether we think it's fair or not is irrelevant, go to the appropriate regulator with a properly constructed complaint explaining what regs you think they've broken. I doubt the it's not fair defence will get you very far.

Part 1 and Part 2 shouldn’t have any bearing on one another.

Are they on the same charge on the same property.

If so then it's likely that one cannot be renewed till the other products active as until it's active it can still be changed. This changes the risk profile to the lender.

You may have 2 debts but to the lender you are a single credit. So, let’s say you want to fix Part 2 without having initiated on the Part 1 refinance - you’ll look like a borrower trying to renegotiate part of their debt (Part 2) with an imminent repayment (Part 1) looming. In their eyes you could actually borrow more (Part 2) and yet immediately default on Part 1 - not a good look for a lending officer.

Why not ask for the part one refinance to start immediately and then fix part two?

Most lenders will waive the ERC T&C’s for the last 3 months of the current loan period when moving to a new deal with themselves.

@tonyf1 - that’s a good shout thank you.