If I won the lottery…

I like to keep a mental note of all the things I will do when I win the lottery (as I remain eternally and misguidedly sure that I eventually will). Not being very interested in cars, my automobile wish-list is fairly short and doesn’t include one of those unnecessarily large suburban-Sherman menaces which are used to ferry one small child to school along a perfectly level Surrey road. I’d probably go for a Maserati GranTourismo for no better than I don’t know anybody else with one.

I actually don’t want for much, and I don’t even think I’d give up work. A big boat moored in Mahon harbour? A villa in a sunny place (with it’s own swimming pool and ample shade to protect my English / Scottish / Scandinavian milky-white skin)? Paying someone to cut the grass? Time to write the book I’ve always wanted to write? Yep, all of these things… but in the last two months, something else has pushed its way up to #1 priority…

Having no mortgage.

Until yesterday, our mortgage lender was Northern Rock. For the benefit of those outside the UK (or people who never switch on the television or read a newspaper) Northern Rock have been through a bit of a sticky patch. Everything was going to be okay as long as its investors didn’t panic and start queuing up outside Northern Rock branches and withdrawing all of their money. Oh dear…

I momentarily entered a state of the most ridiculous optimism where I thought it might collapse so suddenly that they’d lose sight of the fact that I owe them over £350k. A few seconds later I came to my senses. As far as I was concerned as a customer, the impact on me was that they “were unable to offer a mortgage when our current agreement terminated” or something like that. Not a huge surprise.

So, just 22 months after entering a mortgage agreement on a fairly low fixed interest rate, I was facing the prospect of getting a new one and the knowledge that it would cost me more. Here’s the first nasty fact-of-life about mortgages… for most things in life, when you pay more you get usually something better. With a mortgage, you pay more and you get to stay in your own house. £350 more a month and bugger-all for it.

But it gets worse. Mortgage lenders have worked out that unless you’re very rich, lucky, a member of the Royal Family or a tramp, you need a mortgage. Or you can live in a cardboard box under a bridge. Knowing that most people prefer the first option, the lenders will squeeze as much money out of you for the privilege of being a home owner (some time in the future). Set-up fees, admin fees, we-just-thought-of-this fees… and if you’re swapping lenders, you need solicitors involved. Or do you? To be honest, I don’t know, you really have to take some of these things on faith.

The solicitor experience in this process is not like the solicitor interaction you get with buying a house – you don’t sit in the office of some posh bloke who has a certificate on his wall and tells me that thanks to a late 19th century order I can’t keep pigs on my land (which totally ruined my dream of parading two prize sows down Camberley High Street). The so-called solicitors involved in the re-mortgage process appeared to be no more than a call centre manned by operators with a vague understanding of what might possibly be involved. For example, when you tell them two months in advance that our current mortgage arrangement ends on the 1st of August, it’s not very helpful that on the 28th of July they tell you that completion is ready to happen on the 4th of August. Three days of paying the mortgage at Northern Rock’s very expensive fall-back rate? No thanks, you idiots.

So after this expensive, time-consuming and irritating process, what do we get? We live in the same house and pay out £350 more a month. But it’s okay, because the correct six balls will be drawn tomorrow night.

11 Comments

  1. More likely that the thousands of easily-misled people withdrawing combined millions of quid from the Rock hurt them. I paid them on time and it wasn’t my fault that they couldn’t offer a further mortgage.

  2. I don’t quite understand what happened. You borrowed £350k from Northern Rock with the agreement to pay them £xxx per month for another what twenty or thirty years, then they went under and now someone else owns the loan and they want more?

  3. @6 – no, when we moved we got a new mortgage and the interest rate was fixed for 22 months. My brother made the comment that in the US you can agree the interest rate for the entire term of the mortgage but you can’t do that in the UK. You can fix for 5 years but of course they charge you a higher rate of interest to do that.

    So after the 22 months we knew we’d have to ‘re-apply’ for the mortgage. Northern Rock weren’t lending, and our mortgage advisor said that due to the credit crunch over 2,000 mortgage products had been taken off the market. So we had to look for a new mortgage and agree new terms, and because the base interest rate had climbed over the past two years the mortgage interest rate was going to be higher.

    And that’s why it’s an extra £300 for the pleasure of remaining in your own home.

    Finally some advice if your fixed mortgage agreement is ending soon… start sorting things out now, don’t delay on it.

  4. @8 – I think calling them a solicitor would be very generous. More like an administrative conveyor belt. There was a bit of legal stuff required as it involved transfer of deeds from Northern Wreck to Abbey. Our mortgage advisor is excellent and wouldn’t have let us pay for something unnecessary. Of course, the whole industry seems to make you pay for seemingly unnecessary things. The set-up fee is (not) my favourite, that where you pay to be their customer and for them to do their admin so you can be their customer. At least this time we didn’t have these ridiculous searches and I didn’t have to confirm that I didn’t once own a bankrupt carpet business in Bristol. The whole thing is a cottage industry designed to squeeze money out of you.

  5. The setup fee is the biggest con trick in modern financing. What other industry do you pay someone additional £££ to become a customer. If say I buy a TV from John Lewis they don’t take a fiver off me up front as an “operating-the-til” charge.

    The best one was when we approached HSBC to tranfer our fixed to them. If you remember they had a deal for a short time promising to keep the rate the same, the gotcha was the huge and I do mean huge setup fees. They quoted is £9,999.

    Didn’t know you were in the carpet biz chap? :o)

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