# Mortgage Fees... highway robbery



## Mudball (Sep 28, 2018)

Looking to remortgage as we are end of fixed tern.  So called the Bank.. I understand that BoE has raised rates so things will change.  Found a 'deal'..  but the *ankers want Â£1999 as fees!!!  For what??  They have had all the paper work for the past 4 years.  No change in affordability, no new money asked, no new legal or valuation required.. but our CEO needs a new car so can we have 2K free money.  Apparently it is booking fees to secure the loan?  WTF is that?   /Rant over. 
Np wonder no one like the Banks.


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## pauljames87 (Sep 28, 2018)

With interest rates so low itâ€™s prob so they can make a bit of money .. not that they donâ€™t make enough. James blunts


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## OnTour (Sep 29, 2018)

T0ssers thief's hate them, soon as my mortgage is paid off the better 3-4 years max. Hopefully the interest rates will stay low not that they care.


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## Mudball (Sep 29, 2018)

OnTour said:



			T0ssers thief's hate them, soon as my mortgage is paid off the better 3-4 years max. Hopefully the interest rates will stay low not that they care.
		
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You lucky man.. me going to be a slave for another couple of decades at least..


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## LIG (Sep 29, 2018)

Eye-watering fees ! I remember when they were Â£250 and I moaned about that!


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## williamalex1 (Sep 29, 2018)

LIG said:



			Eye-watering fees ! I remember when they were Â£250 and I moaned about that!
		
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I remember in the late 80s interest rates rocketed to about 13% I think . Mortgage free now.where's the ears Smilie gone


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## OnTour (Sep 30, 2018)

Mudball said:



			You lucky man.. me going to be a slave for another couple of decades at least..
		
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I had 14 years to go last year but started a massive Martin money saving effort, over paying monthly was a good start but using my savings gave the project a massive KICK. I really cannot wait to get rid of the parasites from my life. people think banks are doing them a favour. 

I'm hoping in the future I can help my son avoid this issue #Hopefully


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## Paperboy (Sep 30, 2018)

Get yourself on money supermarket. Look at the mortgages surely all of them can't want that type of money!


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## Bunkermagnet (Sep 30, 2018)

Since when were banks a charity? They're a business that eneds to make money just like every other business in the counrty.
Of course if you don't want to pay that fee, swap banks and use another mortgage provider.


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## Mudball (Sep 30, 2018)

Paperboy said:



			Get yourself on money supermarket. Look at the mortgages surely all of them can't want that type of money!
		
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Yup been on all the usual comparison sites... looks like the new standard for lower interest loans is Â£999, Â£1499 or Â£1999.. 

Does anyone know banks negotiate on the arrangement fees?


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## IanM (Sep 30, 2018)

Interest rate margins are almost insufficient to run the business.... but some of the fees are obscene .  Are you staying with same lender?  If moving to new fix, how much less interest over the term are you paying versus their SVR?  Thatâ€™s a lump of the fees....or not!


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## Mark1751 (Sep 30, 2018)

Plenty of mortgages available without fees although you will pay a higher rate for them.

Iâ€™ve never know any bank to negotiate fees, plus if going with a broker you may also pay a fee for their service. Some I know charge Â£500 upfront on top of what you pay the mortgage company.

Work out of by paying the fee verses not paying a fee are you going to be better of over your chosen term then decide.

Also staying with your existing lender my save money by not needing to have any legal work done although some lenders do offer free legals
plus they may even let you do it without having to go through any checks regarding income etc.


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## 3offTheTee (Oct 2, 2018)

Sorry to hear about the fee of 2k. However broken down over 20 years Â£100 per annum, Â£8 per month Â£2 per week!

How would you feel feel if interest rates returned to 15%?


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## IanM (Oct 2, 2018)

3offTheTee said:



			Sorry to hear about the fee of 2k. However broken down over 20 years Â£100 per annum, Â£8 per month Â£2 per week!  How would you feel feel if interest rates returned to 15%?
		
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Indeed, from a lenders perpective, folk rarely stay put with one organisation these days and tend to move around for lower rates.  So, if you only keep an account for 5 years, at 1.8%, when you take out the cost of fundis set up costs, margins are too tight at current rates.   As you say, when spread over longer it less of a "whack in the wotsits!"   

This point was used a the reason for keeping Joing Fees at our golf club!  (and allowing folk to pay off over 3 or 5 years)  In our area where were groups of players moving around trying to negotiate fees with clubs...


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## Mudball (Oct 2, 2018)

IanM said:



			Indeed, from a lenders perpective, folk rarely stay put with one organisation these days and tend to move around for lower rates.  So, if you only keep an account for 5 years, at 1.8%,* when you take out the cost of fundis set up costs, margins are too tight at current rates*.   As you say, when spread over longer it less of a "whack in the wotsits!"  

This point was used a the reason for keeping Joing Fees at our golf club!  (and allowing folk to pay off over 3 or 5 years)  In our area where were groups of players moving around trying to negotiate fees with clubs...
		
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As I understand, banks almost never keep liabilities on their books.. this is esp true with insurers.  Your liabilies will be bundled into some CDO and sold to the highest bidder.  Ofcourse it is not that clean and dry, but it is just another commodity that is traded off to the highest bidder... and thats how we had a financial crises.. no one knew who held what and to whom..


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## IanM (Oct 2, 2018)

.....I was refering to revenue, not balance sheet....

The stem of last crisis (from where I was sitting) was largely good old fashioned poor-quality _over lending_... (mainly buy-to-let sector) subsequent offloading was an effect rather than cause.

The generation older than me would call it "forgetting 300 years of good practice in favour of chasing quick profit!"


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## Slab (Oct 3, 2018)

3offTheTee said:



			Sorry to hear about the fee of 2k. *However broken down over 20 years Â£100 per annum, Â£8 per month Â£2 per week!*

How would you feel feel if interest rates returned to 15%?
		
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Sounds like a return to the days of the 'Man from the Pru'

However without putting words in his mouth, if the bank are happy to collect at Â£2 per week I'd guess the OP would have much less/no issue with the fee (but I guess they want it in larger payments)

(can you tell I'm not a fan of the well used 'technique' of breaking things down to weekly/daily costs )


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## Bunkermagnet (Oct 3, 2018)

Whilst I do agree the fee as a figure looks a lot, I would say that if youâ€™re paying less in total by changing mortgage and paying the fee over staying as you are then it has to be worth it.
Also, without knowing your mortgage (and I donâ€™t want to know)  if your mortgage is Â£50k then the fee is a lot, whereas if itâ€™s Â£500k then itâ€™s not that bad.


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## Rooter (Oct 3, 2018)

exactly as bunker magent points out, work out the total cost over the term you expect to hold the mortgage for. I doubt its 20 years+ so if its a 5 year fixed deal, work out how much you pay back on the rate they gove you, Vs a deal from somewhere with no fee but i expect a higher rate of interest.

2k is probably standard now for a decent size mortgage, it is what it is. you have 2 choices, take it or leave it.


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## Crazyface (Oct 3, 2018)

What are you moaning about? A quick google brings up loads of mortgages with no "set up fees" and at 2%. Just what do you want ! ?????? Cake and eat it?


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## Rooter (Oct 3, 2018)

Crazyface said:



			What are you moaning about? A quick google brings up loads of mortgages with no "set up fees" and at 2%. Just what do you want ! ?????? Cake and eat it?
		
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Where does one find this cake? I cant be arsed to google it....


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## Crazyface (Oct 3, 2018)

'ang on a mo.


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## Crazyface (Oct 3, 2018)

https://www.moneysavingexpert.com/m...&productlength[]=-1&resultsOrder=MortgageFees


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## Crazyface (Oct 3, 2018)

There you go....


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## Mudball (Oct 3, 2018)

Crazyface said:



			What are you moaning about? A quick google brings up loads of mortgages with no "set up fees" and at 2%. Just what do you want ! ?????? Cake and eat it?
		
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Those ones are usually higher rates so outgoing usually higher.



Crazyface said:



https://www.moneysavingexpert.com/mortgages/best-buys/?

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Tnx, had a look at the top one here based on my data... the monthly difference is about Â£83, so over the 2 yr term.. i will pay Â£1992.   Hence turns out to be more expensive in the long run 


Anyways spent some time with a mortagage advisor - one of those gelled hair guy at the estate agent - yesterday who did some of the leg work and looks like we probably have the best deal once you consider term, fees, monthly etc.  The difference between the 'best' deal and our new offer is about Â£5 a month for a fixed term of 2yrs.  .   So it looks like we will stay as I dont need to do anything other than sign a piece of paper.  i still have to pay Â£999 for it.    The fees on the best deal is Â£1999.  So my 5quid a month works cheaper.   It still means my mortuage has gone up by 30 quid thanks to the interest rise.


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## Crazyface (Oct 3, 2018)

Usually higher!!!!!!!!!!   How old are you ?!!!!! If you're worried about that, you've borrowed far too much. If the interest rates ever went anywhere near where they used to be you've lost your house !!!!!!!!! No wonder these kids are being able to afford things (flash new cars/ phones massive houses) if the banks are letting them borrow too much. 

BE VERY CAREFUL !!!!


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## Mudball (Oct 3, 2018)

Crazyface said:



			Usually higher!!!!!!!!!!   How old are you ?!!!!! If you're worried about that, you've borrowed far too much. If the interest rates ever went anywhere near where they used to be you've lost your house !!!!!!!!! No wonder these kids are being able to afford things (flash new cars/ phones massive houses) if the banks are letting them borrow too much.

*BE VERY CAREFUL *!!!!
		
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I get that feeling very often..   no wonder stress is a killer.   Highly leveraged is the word you were looking for.


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## pauljames87 (Oct 3, 2018)

Crazyface said:



			Usually higher!!!!!!!!!!   How old are you ?!!!!! If you're worried about that, you've borrowed far too much. If the interest rates ever went anywhere near where they used to be you've lost your house !!!!!!!!! No wonder these kids are being able to afford things (flash new cars/ phones massive houses) if the banks are letting them borrow too much.

BE VERY CAREFUL !!!!
		
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Rates will never get to that high again. And if you notice when people paid higher rates mortgages were much lower because of lower house prices so mortgages were a lot less than they are now per month.


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## Mudball (Oct 3, 2018)

pauljames87 said:



			Rates will never get to that high again. And if you notice when people paid higher rates mortgages were much lower because of lower house prices so mortgages were a lot less than they are now per month.
		
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I have a feeling we will go the other way..  Post Brexit, the BoE might be forced to cut rates back down to get over the hump.  This might be a temporary arrangement to ride out 2019.  it will go back up in 2020 to manage inflation.  It will slowely get back to 2% ish sometime by 2025.   Of course this is not an expert view and all options open here.


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## pauljames87 (Oct 3, 2018)

Mudball said:



			I have a feeling we will go the other way..  Post Brexit, the BoE might be forced to cut rates back down to get over the hump.  This might be a temporary arrangement to ride out 2019.  it will go back up in 2020 to manage inflation.  It will slowely get back to 2% ish sometime by 2025.   Of course this is not an expert view and all options open here.
		
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With brexit causing uncertainty my mortgage was up for renewal at Xmas. Was allowed to switch rates early .. so lowered the interest to 2.79% down from 3.19 .. saving Â£65 a month.. fixed it for 10 years so I know my out goingâ€™s for next 10 years.. took the savings plus an extra Â£55 to overpay by Â£120pcm over the 10 years

Overall Iâ€™m paying Â£55 a month but means in 10 years Iâ€™d of paid off an additional 14k off my loan

Itâ€™s nice having that fixed for 10 years. Mortgage rates wonâ€™t go down that much but if they go up Iâ€™m protected


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## IanM (Oct 3, 2018)

They can't go down much unless they go negative! (has happened in Japan!)

They won't go up much as this is one variable that can be managed! 

A 10 year fix at the rate you got seems deceny shout (with what we know today!!)  10 years is a long time though... but if you can overpay, it's a decent idea as you'll wont getr 2.79 on your savings!  Bitcoin anyone?  ANYONE???


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## pauljames87 (Oct 3, 2018)

IanM said:



			They can't go down much unless they go negative! (has happened in Japan!)

They won't go up much as this is one variable that can be managed!

A 10 year fix at the rate you got seems deceny shout (with what we know today!!)  10 years is a long time though... but if you can overpay, it's a decent idea as you'll wont getr 2.79 on your savings!  Bitcoin anyone?  ANYONE???
		
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Can overpay 10% per year of the original loan so 25k a year I can overpay without pen

Going to try and increase overpayments with each annual pay rise aswell so fingers crossed will clear 20k off by time the 10 years is up


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## Mudball (Oct 3, 2018)

Similar idea,.. overpay something every month..  hopefully the next time it go to reneg, we are under a psychological mark.


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## ScienceBoy (Oct 4, 2018)

Itâ€™s an expected expense, Iâ€™ve been saving up money just for costs like these.


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## Ross61 (Oct 5, 2018)

Mudball said:



			Those ones are usually higher rates so outgoing usually higher.


Tnx, had a look at the top one here based on my data... the monthly difference is about Â£83, so over the 2 yr term.. i will pay Â£1992.   Hence turns out to be more expensive in the long run
		
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It depends how you pay that Â£2000 fee. If you add it to your mortgage you are paying it off until the full length of the mortgage is paid, not just until you lump on another 2 grand for the next deal in 2/3/5 years. You might be paying more per month on fee free mortgage but the total mortgage is only going down NOT getting bigger.


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## Paperboy (Oct 5, 2018)

I'm over paying Â£200 a month at the moment, got about 10 months left on my fixed term.

So hoping to pay a big chunk off before re-mortgaging myself next year. If I can pay the chunk I want off I can re-mortgage for less then 15 years!!


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## Blue in Munich (Oct 8, 2018)

pauljames87 said:



			Rates will never get to that high again. And if you notice when people paid higher rates mortgages were much lower because of lower house prices so mortgages were a lot less than they are now per month.
		
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Can you remind us what wages were like then for a fair comparison...


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## pauljames87 (Oct 8, 2018)

Blue in Munich said:



			Can you remind us what wages were like then for a fair comparison...  

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Yeah because house price % rises over 20 years havenâ€™t completely outweighed salary increases........


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## Blue in Munich (Oct 10, 2018)

pauljames87 said:



			Yeah because house price % rises over 20 years havenâ€™t completely outweighed salary increases........
		
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House prices were lower then because the high interest rates effectively capped the available mortgages; that and the bank limit on how many times salary they would allow, plus a bigger housing stock meaning less competition for each house.  Now with lower interest rates and the banks increasing the number of times salary they will allow means that the slightly increased salaries can afford relatively much larger mortgages and so the house price increases outweighed salary increases.  That and a reduced housing stock meaning people will fight harder for the available ones.


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## pauljames87 (Oct 10, 2018)

Blue in Munich said:



			House prices were lower then because the high interest rates effectively capped the available mortgages; that and the bank limit on how many times salary they would allow, plus a bigger housing stock meaning less competition for each house.  Now with lower interest rates and the banks increasing the number of times salary they will allow means that the slightly increased salaries can afford relatively much larger mortgages and so the house price increases outweighed salary increases.  That and a reduced housing stock meaning people will fight harder for the available ones.
		
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However the point remains.. a lower % interest rate on a much higher mortgage costs more than a higher interest rate on a lower mortgage 

2.79% rate on 240000 mortgage is a lot  more a month than 10% rate on a 50,000 mortgage and with wages not rises to cover it mortgages cost more % of wages.


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## Bunkermagnet (Oct 11, 2018)

pauljames87 said:



			However the point remains.. a lower % interest rate on a much higher mortgage costs more than a higher interest rate on a lower mortgage

2.79% rate on 240000 mortgage is a lot  more a month than 10% rate on a 50,000 mortgage and with wages not rises to cover it mortgages cost more % of wages.
		
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I would have said the last time mortgages might have been around Â£50k, the interest rates would have been around 15%. I would say mortgages are easier to maintain now than back in the 80â€™s or 90â€™s. 
What we have now is a society where excessive mobile phone and tv contracts are the norm and where people have to change their car every 3 years just to keep up the affluent image.


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## pauljames87 (Oct 11, 2018)

Bunkermagnet said:



			I would have said the last time mortgages might have been around Â£50k, the interest rates would have been around 15%. I would say mortgages are easier to maintain now than back in the 80â€™s or 90â€™s. 
What we have now is a society where excessive mobile phone and tv contracts are the norm and where people have to change their car every 3 years just to keep up the affluent image.
		
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The world changed and adapts however people donâ€™t. Majority will always behave like they did in their day which there is nothing wrong with ofc. However they can never understand why the younger generation do what they do.

You can say tv contracts, mobile contracts etc but these werenâ€™t around when mortgage rates were low.. the tech just didnâ€™t excist.

In the same breath Iâ€™m not saying this generation has it right in the slightest. Both have good and bad points.


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## Bunkermagnet (Oct 11, 2018)

pauljames87 said:



			The world changed and adapts however people donâ€™t. Majority will always behave like they did in their day which there is nothing wrong with ofc. However they can never understand why the younger generation do what they do.

You can say tv contracts, mobile contracts etc but these werenâ€™t around when mortgage rates were low.. the tech just didnâ€™t excist.

In the same breath Iâ€™m not saying this generation has it right in the slightest. Both have good and bad points.
		
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Phone and tv contracts have been around longer than you think. However what has changed is that back in the 80/90 even ealry 00's you didnt NEED a big mobile phone contract, tv package or whetever. Nowadays people NEED those to survive life. If you havent had something before it comes along you can do without it, it youv'e always had it you cant understand how people did without it.


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## IanM (Oct 12, 2018)

I was helping a (younger) colleague sort out his remortage prep... I asked what he spent a year on car, phone, Sky, netflicks etc etc, he hadnt a clue.  He had never done an income/expenditure breakdown in his life.... so he did, and was shocked.   Guess what, he had no savings, no pension payments and increasing borrowing.   He blamed the governemnt for eroding real incomes...I (silently) blamed his lack of financial savvy, but hey-ho!  Lets see what he does with the advice he got! 

In my dad's day, you got a wage packet on a Friday, when the cash was gone, it was gone!  Very easy to notice.


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## Bunkermagnet (Oct 12, 2018)

IanM said:



			In my dad's day, you got a wage packet on a Friday, when the cash was gone, it was gone!  Very easy to notice. 

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As did I when I first started working, and only went to monthly in the bank payments around 84. It made financial planning so much easier, and you more careful.


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## PhilTheFragger (Nov 17, 2018)

Sitting pretty with a lifetime tracker at 0.23% over base, been paying virtually nothing for past 10 years, so able to put spare dosh in an ISA which has done well. so when interest rates started to rise, paid off a big chunk of the mortgage.

Will be mortgage free soon
Oh yes ðŸ‘


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## harpo_72 (Jul 29, 2020)

IanM said:



			I was helping a (younger) colleague sort out his remortage prep... I asked what he spent a year on car, phone, Sky, netflicks etc etc, he hadnt a clue.  He had never done an income/expenditure breakdown in his life.... so he did, and was shocked.   Guess what, he had no savings, no pension payments and increasing borrowing.   He blamed the governemnt for eroding real incomes...I (silently) blamed his lack of financial savvy, but hey-ho!  Lets see what he does with the advice he got!

In my dad's day, you got a wage packet on a Friday, when the cash was gone, it was gone!  Very easy to notice. 

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This is exactly it, the other problem is people think they are entitled to these things and working and saving for something seems to be a dying activity.


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## Mudball (Jul 29, 2020)

IanM said:



			I was helping a (younger) colleague sort out his remortage prep... I asked what he spent a year on car, phone, Sky, netflicks etc etc, he hadnt a clue.  He had never done an income/expenditure breakdown in his life.... so he did, and was shocked.   Guess what, he had no savings, no pension payments and increasing borrowing.   He blamed the governemnt for eroding real incomes...I (silently) blamed his lack of financial savvy, but hey-ho!  Lets see what he does with the advice he got!

In my dad's day, you got a wage packet on a Friday, when the cash was gone, it was gone!  Very easy to notice. 

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you can be sure he will know when he is due for upgrade to a new shiny phone or wheels..    bloody govt making it so easy to switch..


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## ScienceBoy (Jul 29, 2020)

I guess I don’t qualify as young anymore but when I started my first job in 2007 I started saving for a house. I did all the monthly finances on a spreadsheet so I knew where all the money went. It still took me 10 years and help from family to afford a house!

I find these days it’s super easy to keep on top of spending as my banking app has features built in. I don’t need the spreadsheet anymore.


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## Mudball (Jul 29, 2020)

Slightly different question...   anyone here taken a covid mortgage holiday...     I did and managed to confuse the bank completely.   the scenario is simple

Assume.. my mortgage is 2k per month.   Roughly 1k for interest and 1k for principle

I take a holiday, but i dont want to be hit by a big charge later...  hence i decide to pay 1.3k.   My initial assumption was that the 1.3 would go directly to principle rather than interest.  This way, i am increasing my principle payment by 30% while reducing my monthly outgoing by 700 quid.   Spoke to a guy from the bank and wanted to know how it is calculated.  For the life of him, he could not explain the calculations.   At the end, he said, dont worry, the overpayment is good and let us see what happens when the holiday finishes.


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## Rooter (Jul 29, 2020)

Mudball said:



			Slightly different question...   anyone here taken a covid mortgage holiday...     I did and managed to confuse the bank completely.   the scenario is simple

Assume.. my mortgage is 2k per month.   Roughly 1k for interest and 1k for principle

I take a holiday, but i dont want to be hit by a big charge later...  hence i decide to pay 1.3k.   My initial assumption was that the 1.3 would go directly to principle rather than interest.  This way, i am increasing my principle payment by 30% while reducing my monthly outgoing by 700 quid.   Spoke to a guy from the bank and wanted to know how it is calculated.  For the life of him, he could not explain the calculations.   At the end, he said, dont worry, the overpayment is good and let us see what happens when the holiday finishes.   

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out of interest, were you furloughed? I though our industries did pretty well, keeping everyone going.


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## doublebogey7 (Jul 29, 2020)

Mudball said:



			Slightly different question...   anyone here taken a covid mortgage holiday...     I did and managed to confuse the bank completely.   the scenario is simple

Assume.. my mortgage is 2k per month.   Roughly 1k for interest and 1k for principle

I take a holiday, but i dont want to be hit by a big charge later...  hence i decide to pay 1.3k.   My initial assumption was that the 1.3 would go directly to principle rather than interest.  This way, i am increasing my principle payment by 30% while reducing my monthly outgoing by 700 quid.   Spoke to a guy from the bank and wanted to know how it is calculated.  For the life of him, he could not explain the calculations.   At the end, he said, dont worry, the overpayment is good and let us see what happens when the holiday finishes.   

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I apologise if I have misunderstood what you are saying here,  but when the bank grants you a payment holiday it is simply that and not an interest holiday. You will therefore at some point need to pay both the interest and the principle you have not paid during the holiday.  I guess you confused the bank because they do not allocate any payments in the way you are asking them to.  Simply they take any payments off what you owe them (principle plus interest).


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## Mudball (Jul 29, 2020)

Rooter said:



			out of interest, were you furloughed? I though our industries did pretty well, keeping everyone going.
		
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Not yet... but the mortgage holiday is open to all.



doublebogey7 said:



			I apologise if I have misunderstood what you are saying here,  but when the bank grants you a payment holiday it is simply that and not an interest holiday. You will therefore at some point need to pay both the interest and the principle you have not paid during the holiday.  I guess you confused the bank because they do not allocate any payments in the way you are asking them to.  Simply they take any payments off what you owe them (principle plus interest).
		
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yes,,, interest calculation still continues.   My confusion was 

assume 1 owe 100k; every month, i reduce it by 1k on normal payment.   so at the end of it i owe 97k.   I have also paid 3k of interest.  
in new situation  after the end of 3 months, i would owe 96.1k rather than 97k...  So my new interest would be against 96 rather than 97k.   

However, the assumption is wrong, since it appears that they calculate interest and keep it on the side.. so everymonth, they set aside 1k of interest accruals.  So when i pay 1.3k, they are basically using 1k against the interest rather than principle.  So i was better off payiing the mortgage rather than a holiday


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## SwingsitlikeHogan (Jul 29, 2020)

harpo_72 said:



			This is exactly it, the other problem is people think they are entitled to these things and working and saving for something seems to be a dying activity.
		
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Unfortunately many of the parents of the current younger generation - such as those of us who had our children in the late 80s to mid 90s - often did not set much of an example in respect of saving.   Through the 1990s and well into the 2000s credit was easily available and with ever rising house prices, getting extensions to mortgages was also dead easy.  I recall applying for a £17,000 extension to my mortgage and getting the cash in my bank account within 3 days of a quick chat with my lender's mortgage advisor - she just took my word for it being affordable.  I couldn't believe how easy it was.  Nuts!  As a result our children grew up knowing that we could get pretty much what we wanted (within reason) when we wanted it.  Fortunately they understand the reality of today.  However us of the boomer-age are not blameless.


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## Rooter (Jul 29, 2020)

Mudball said:



			Not yet... but the mortgage holiday is open to all.
		
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While technically yes, the reason they were offered was to help those with a genuine need/requirement. I have friends that have done it, all to bank some cash. The process does not sit well with me when people do not need help and are solely doing it through greed. I had a pay cut of 25% of my basic for 3 months, however I could still afford my mortgage payments, so I did not take a holiday.

But each to their own.


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## Grant85 (Jul 29, 2020)

Just 50p worth of free advice folks. It seems we have an obsession with people paying their mortgage off or overpaying. 

Interest rates are so low, what is the point? Someone with a sensible loan to value (under 70%) has been paying less than 2% for the past decade and it's not likely to change much in the next couple of years at least. 

The biggest cost with a mortgage is jumping to a new fixed rate every 2 years. Takes a bit of time, and often £1000 to £1500 fees each time. This becomes disproportionately more expensive as time goes on and your mortgage balance is smaller. 

Over a 10 year period (any 10 year period in history) you'd be better putting your over payments into an ISA in a balanced or even adventurous portfolio. As well as making sure you add the fees to the loan rather than pay them out of savings, and even extend your mortgage to make home improvements (rather than using savings). 

There is very little chance of the returns on that not beating the interest on your mortgage and putting yourself into a better position. 

Lets say 10 years down the line, you've squirrelled away £20,000 (average of £166.67 per month in over payments). Investment growth might have boosted this to £25,000 or £30,000. And your mortgage balance has still reduced by making your regular payments.

Even the poorest decade in recent memory (July 2007 to July 2017) a balanced portoflio returned 63%. And over the past decade 82%. Ok - you're not getting all of that growth as you are putting in regular premiums over time, but the risk is very very small and it makes very little sense to reduce a mortgage debt at such low rates.


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## Mudball (Jul 29, 2020)

ScienceBoy said:



			I guess I don’t qualify as young anymore but when I started my first job in 2007 I started saving for a house. I did all the monthly finances on a spreadsheet so I knew where all the money went. It still took me 10 years and help from family to afford a house!

I find these days it’s super easy to keep on top of spending as my banking app has features built in. I don’t need the spreadsheet anymore.
		
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you have had good habits in your first 10 years... the apps are a way to just automate them.. keep it up


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## jim8flog (Jul 29, 2020)

Mudball said:



			Slightly different question...   anyone here taken a covid mortgage holiday...     I did and managed to confuse the bank completely.   the scenario is simple

Assume.. my mortgage is 2k per month.   Roughly 1k for interest and 1k for principle

I take a holiday, but i dont want to be hit by a big charge later...  hence i decide to pay 1.3k.   My initial assumption was that the 1.3 would go directly to principle rather than interest.  This way, i am increasing my principle payment by 30% while reducing my monthly outgoing by 700 quid.   Spoke to a guy from the bank and wanted to know how it is calculated.  For the life of him, he could not explain the calculations.   At the end, he said, dont worry, the overpayment is good and let us see what happens when the holiday finishes.   

Click to expand...

 My understanding is that it works like this -

You have mortgage financial year with a start and end date. At the year start date you owe x (any interest chargeable is based upon that figure), at the end year date they add any interest that was due to be paid during the 12 months to x they then take off any payments made during the 12  months from that figure.

When it comes to overpayments the advice used to be make one lump sum payment close to the end of year date and keep the money in a saving account in the mean time.

This may have changed with some banks /mortgage companies  now working on a rolling month basis but I know my lender still uses the method I described as it is contained in the contract.


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## Mudball (Jul 29, 2020)

jim8flog said:



			My understanding is that it works like this -

You have mortgage financial year with a start and end date. At the year start date you owe x (any interest chargeable is based upon that figure), at the end year date they add any interest that was due to be paid during the 12 months to x they then take off any payments made during the 12  months from that figure.

When it comes to overpayments the advice used to be make one lump sum payment close to the end of year date and keep the money in a saving account in the mean time.

This may have changed with some banks /mortgage companies  now working on a rolling month basis but I know my lender still uses the method I described as it is contained in the contract.
		
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I think those days are gone... now interest calculated daily by many banks rather than monthly or yearly.   So if i put 100 quid on 15th Jan, then it goes off principle straightaway.  Worst case goes off at the end of the month.   Hence when you look at the mortgage statement, these days - on a 2k morgage,  it will show 1K interest and 1k principle in Jan, 999 interest, 1001 principle in Feb and so on.  If you make a overpayment in March, then it will change the calculation for April.    

BTW, the Yearly rest may still be valid for some banks/societies


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## ScienceBoy (Jul 29, 2020)

Mudball said:



			you have had good habits in your first 10 years... the apps are a way to just automate them.. keep it up
		
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More that I don’t watch TV, drive rust bucket cars and broke the zip on my wallet years ago, also dont want to disturb the moths that live it anyway.


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## harpo_72 (Jul 29, 2020)

Sorry but paying off the mortgage or reducing to a low point which could be cleared at the point when interest rates go up is the best policy.
Interest on loans is dead money.. so get rid. 
Presently Borrowing is cheap and spending is being encouraged as you have no savings interest of note. Isas are devalued as the markets have dropped. By all means borrow money at a low rate and chuck in an ISA or put in your savings.. but you will have to wait until we have recovered to really profit.
Personally I would save in an isa and then pay a chunk of mortgage off at renegotiation point. 
Would I take a pension out? I have a company one but they charge too much in admin fees and will always release in the least favourable value to me .. let me own my houses and I will off load when it benefits me. 
Financial services charge too much for too little .. but then again the choice is yours.
Car loans and PCP deals are not worth looking at if the APR is over 2% .. the law should set a max over base that these can be offered to stop financial issues. Plus the level of lending should be strictly adhered to. 
I will say it again interest is dead money don’t pay it .. make people work to earn.
The banks have benefited from this situation they have not lost a penny they have not helped us .. some soft soothing words do not resolve the issues they will be round to collect.


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## jim8flog (Jul 29, 2020)

Mudball said:



			I think those days are gone... now interest calculated daily by many banks rather than monthly or yearly.   So if i put 100 quid on 15th Jan, then it goes off principle straightaway.  Worst case goes off at the end of the month.   Hence when you look at the mortgage statement, these days - on a 2k morgage,  it will show 1K interest and 1k principle in Jan, 999 interest, 1001 principle in Feb and so on.  If you make a overpayment in March, then it will change the calculation for April.   

BTW, the Yearly rest may still be valid for some banks/societies
		
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The last time I had a repayment mortgage was the first one I ever had back in the 1970s and have always had interest only mortgages since.  I stopped working in Financial services many years ago hence my 'the way it used to work'. My current mortgage is a lifetime interest only mortgage and works on the year end basis probably because any repayments are optional.


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## Mudball (Jul 29, 2020)

jim8flog said:



			The last time I had a repayment mortgage was the first one I ever had back in the 1970s and have always had interest only mortgages since.  I stopped working in Financial services many years ago hence my 'the way it used to work'. My current mortgage is a *lifetime interest only mortgage* and works on the year end basis probably because any repayments are optional.
		
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Agree that might work in that context...   unfortunately, i cant think of a interest only one..  but it is an interesting proposition...  The bet is that house prices will go up...  I think my LTV needs to drop a bit more to give me that comfort..


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## jim8flog (Jul 30, 2020)

Mudball said:



			Agree that might work in that context...   unfortunately, i cant think of a interest only one..  but it is an interesting proposition...  The bet is that house prices will go up...  I think my LTV needs to drop a bit more to give me that comfort..
		
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 I am of an age when the vast majority took out investment linked (such as endowment, pension or in later years ISA) interest only mortgages they made a lot more sense at the time than repayment  mortgages. Although slightly more expensive the total return far outweighed the extra cost eg before the financial crisis someone with an 80% endowment ie the guaranteed sum was 80% the mortgage the policies normally returned about 1.40 x mortgage. Pension polices were the best because you got tax relief on the pension payments

Obviously I have not done the figures in years but with a repayment mortgage if you only pay the minimum required with a 25 years mortgage it used to be that you only were 'really' paying off the mortgage in the final 8 or so years because the repayment element of the monthly amount was so small.


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## IanM (Jul 30, 2020)

ah, the same folk who sold us oldies Endowment Mortgages, are now trying to sell pension products!


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## harpo_72 (Jul 30, 2020)

IanM said:



			ah, the same folk who sold us oldies Endowment Mortgages, are now trying to sell pension products!   

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And come cash in time, they will choose the lowest possible payout and will have taken 30 pence in every pound you invested.. but they have a nice caveat that says your investment can go up or down.. I am waiting for a car manufacturer to state your car may not start every day .. loss is just poor management and half of them are just gambling your hard earned away and getting rather large bonuses ..


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## jim8flog (Jul 31, 2020)

On a personal level I was more than happy with my Endowment Mortgage. It meant my mortgage was paid of absolutely years before I reached 65 despite several house moves which would have necessitated a new repayment term had I gone the repayment method. 

Mind you I did endowments with guaranteed payouts not just the cheapest ones I could afford.


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## StevenMorrison (Oct 3, 2020)

To date, the pandemic has taken over every part of our lives. It's probably hard to imagine that once everything was fine. To a greater extent, this has also affected the financial sector. To begin with,as the owner of a chain of coffee shops, I felt the crisis during the pandemic and there was practically nothing I could do about it. But on the advice of a friend, I decided to try to additionally invest in the development of a popular online store. Because of the crisis, I had to take out a loan. After studying many sources of information I accidentally came across https://www.moneyexpert.com/loans/what-to-do-if-you-cant-pay-back-a-loan/ and I didn't regret trusting them. This investment helped me start earning money at a difficult time for everyone and the demand for this industry continues to grow even now. I hope my experience helped you make the right decision.


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## Mudball (Oct 3, 2020)

StevenMorrison said:



			in fact, I understand you and fully support you
		
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Interesting conversation with the bank. They have offered a 1.29% fixed.  Asked them about interest  only and got put thru retention. They will offer a part and part deal which I think is a good idea. Waiting to hear more more about it


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## JackDuncan (Jan 22, 2021)

Please tell me if I lost my job during the quarantine and haven't yet found a new one, can I reduce the mortgage interest or freeze payments for a while? I've heard that refinancing a mortgage can reduce monthly repayments, and I want to use this to buy some time. Of course, I know that I should contact a specialist who understands this, but I do not have the money to hire someone, so I found a company through which I can get mortgage advice essex for free. And They said that they know how to handle it. Has anyone delt with them?


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## jim8flog (Jan 22, 2021)

JackDuncan said:



			Please tell me if I lost my job during the quarantine and haven't yet found a new one, can I reduce the mortgage interest or freeze payments for a while?
		
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I would suggest you talk to your lender rather than a golf forum. It is always best to let them know before things get out of hand in the first place.


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## sunshine (Jan 28, 2021)

jim8flog said:



			The last time I had a repayment mortgage was the first one I ever had back in the 1970s and have always had interest only mortgages since.  I stopped working in Financial services many years ago hence my 'the way it used to work'. My current mortgage is a lifetime interest only mortgage and works on the year end basis probably because any repayments are optional.
		
Click to expand...

Your lender may present the calculations to you this way in an annual statement for simplicity, however the actual calc will be daily. If you increased or reduced the loan principal you would see the interest calc change from the following day.


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## jim8flog (Jan 28, 2021)

sunshine said:



			Your lender may present the calculations to you this way in an annual statement for simplicity, however the actual calc will be daily. If you increased or reduced the loan principal you would see the interest calc change from the following day.
		
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Not really worried either way as it is equity release and I do not intend to make any repayments. The increase in value of the property has way outstripped the added  increase in the amount on loan.


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## sunshine (Jan 29, 2021)

In some respects, the value of your home is irrelevant if you plan to just live in it. I wish I had got on the property ladder sooner, but when I look at prices today I consider myself lucky to be on it already. Affordability (especially in the south east) is just not right and I don't really understand how it got there.


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## SwingsitlikeHogan (Feb 1, 2022)

JackDuncan said:



			Please tell me if I lost my job during the quarantine and haven't yet found a new one, can I reduce the mortgage interest or freeze payments for a while? I've heard that refinancing a mortgage can reduce monthly repayments, and I want to use this to buy some time. Of course, I know that I should contact a specialist who understands this, but I do not have the money to hire someone, so I found a company through which I can get mortgage advice essex for free. And They said that they know how to handle it. Has anyone delt with them?
		
Click to expand...

When we were struggling a bit with our monthly repayment we agreed an extension of 5 yrs to our repayment period.  This took the end date out to my 70th birthday  - when previously it had been my 65th - but reduced our monthly payment by a third - a good few hundred pounds.

This meant that, assuming I still aimed to retire at 65, we'd still have a not inconsiderable residual amount to pay off due to our extending the period.  However we knew that one way or another we would have the funds to clear the residual amount when I retired at 65 (or whenever).  Indeed that is exactly what happened - my wife retired from the NHS and we used some of her pension lump sum to pay off our mortgage.

You would only do this with Finance Advisor advice as you most probably wouldn't want to be stuck with a significant monthly mortgage payment after you retire.  And I note that we might only have been able to do this as we only had 10yrs or so to go - and so increasing that period to 15yrs (rather than back over 25yrs say) might have been what made it very straightforward.


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## Bunkermagnet (Feb 1, 2022)

Subtle spam, don't be fooled


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## Captainron (Feb 2, 2022)

edsaqwer said:



			Most banks and companies make much money from mortgages. But the only thing they do is cheat ordinary people.
		
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Banks allow people to purchase homes by lending them money. A rate if interest is applied. Fees are shown prior to any agreement being signed by the customer. No cheating there?


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## Oddsocks (Feb 2, 2022)

I think the op’s issue was that he was staying with the same bank.  With no re evaluations needs etc as he’s been with them years, I’m in agreement as simply he’s being charged for being loyal and it’s not a small fee either.


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## jim8flog (Feb 2, 2022)

SwingsitlikeHogan said:



			When we were struggling a bit with our monthly repayment we agreed an extension of 5 yrs to our repayment period.  This took the end date out to my 70th birthday  - when previously it had been my 65th - but reduced our monthly payment by a third - a good few hundred pounds.

.
		
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Interesting that.  Part of the reason I now have a lifetime mortgage  ( with another company) was because my original lender refused to extend my mortgage beyond the age of 65.


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## Crazyface (Feb 2, 2022)

I've been lucky with mortgages. Even with the endowment one, which looks as though it will hit it's original value in two years, although the house is long gone. We will be mortgage free in 6 months, all being well. I'll be able to retire, but think I'll keep on working for now as I enjoy the crack at where I currently work. Plus the benefits are good too.


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## liamfox3 (Feb 4, 2022)

I suffered from a mortgage during the pandemic, too. At first, we paid what we were supposed to, but we wanted to take a mortgage vacation when we realized the quarantine would drag on.  But we were told that all the banks have suspended this service. And they offered only one option - to sell the apartment before the summer and pay off the mortgage. Then my wife asked her mother to help us take a reverse mortgage. She arranged it with goodlifehomeloans, and we paid off our mortgage. As soon as we started working, we started collecting money to pay my mom back. We haven't paid back all of the debt yet, but this decision really saved us


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## 3offTheTee (Feb 4, 2022)

edsaqwer said:



			Most banks and companies make much money from mortgages. But the only thing they do is cheat ordinary people.
		
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Really, care to elaborate. Welcome and quite an unconventional first post


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## Val (Feb 4, 2022)

liamfox3 said:



			I suffered from a mortgage during the pandemic, too. At first, we paid what we were supposed to, but we wanted to take a mortgage vacation when we realized the quarantine would drag on
		
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Mortgage vacation is a last resort, avoid at all costs


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