My mortgage came up for renewal right at the time in 2009 when UK interest rates hit rock bottom. This was unprecidented, and most financial advice was to take out a fixed-rate mortgage. So I perhaps went overboard and got one for ten years.
Five years on, interest rates haven't moved and I'm losing money on it to the tune of £100 a month. Obviously, this is ongoing: so that decision has cost me about £5000 in real terms so far. It'll come to a lot more by the end of the mortgage, unless interest rates rise.
Being fixed rate, it's been designed so you can't get out early. If I decide to end the mortage, it'll cost me £1,000 per year of the mortgage remaining - which is roughly what I'm losing anyway, so that seems a bad idea.
I can overpay by up to £500 per month. However, doing this doesn't help pay down the mortgage at all: the total is just added up and will cause the mortgage to end early, by a period dependent on the overpayment total.
This seems to me to be a very bad idea because hoping interest rates rise over the next five years is the only hope I have of making good on some of the losses that I've made.
Is this sensible thinking? If so, is there anything at all I can do to try and ameliorate the financial pain this product is causing me?
