We bought our house in 2001. I had a well-paying City job with Merrill Lynch. I had worked my way up from Compliance and Operations and into a new role as Communications Manager. This particular move was our third. We were following the long-established pattern of moving up the ladder. We were comfortable in our life roles and aside from all the everyday demands of maintaining a mortgage, everything seemed on track.
Our first challenge came a few years later, during the financial crisis of 2008. The inevitable backlash of the “Big Short” resulted in my being made redundant. I had survived several rounds of cuts, but it was not to be. In the stopgap, I started contracting to UBS and the Bank of New York Mellon. The financial industry was experiencing huge pressure though. I was surrounded by organizations that downsizing in the wake of the credit crunch. Work dried up again. As the waves rolled in, we started to flounder.
I found myself unemployed and on Income Support. Everything suddenly changed. One moment our life was on an upward trajectory. The next, our outgoings became an insurmountable object. It is in these moments of clarity that you suddenly realize how far invested in the game you have become. We felt like we were on a sinking ship. One from which we could not escape.
Financially, we crashed heavily. Having previously been on a relatively high salary, it meant we were more geared up than average and suddenly we couldn’t service our credit cards or monthly bills. The upkeep and maintenance for the house continued to land punches. We had taken the decision to use our credit cards to pay the mortgage as a bridging loan. We were sure everything would be fine once I landed my next job. Life is never that simple though. The longer I was out of work, the bigger the hole in my CV. Declining interest from employers led to a longer period unemployed which led to fewer opportunities and so on. I was in a self-perpetuating cycle. A financial and secular downward spiral.
Ironically, I was once a regional bank manager in Australia and had spent time working in Collections. What a humbling experience to be on the other side of the desk appealing to an unsympathetic mortgage lender. I needed to take hold of my own destiny. With employers becoming less interested I decided to diversify into something new. My wife had been running a small home business – a dog-boarding agency. She was keen to develop her writing career and so I took on the business to develop an income. She, in turn, pursued her writing career. Through sheer grit and determination, we eventually traded our way out of mortgage arrears. My wife is now a successful indie writer, with 14 books to her name. Writing doesn’t return the rewards it may have once done, what with Amazon and other online platforms eroding the profits, but I am immensely proud of what she has achieved, as is she.
Our financial situation changed for the worse in 2012, when we were put onto the SVR (Standard Variable Rate) by Santander. We had reached the first contract anniversary of our mortgage since falling into arrears by around two and a half months. They took this step despite us having been placed in an arrangement to clear the arrears. This increased our repayments from £566 month to £898 month, an increase of nearly 60%. The bank knew we were already struggling. In a weird twist, the higher repayment meant our arrears only represented a month and a half’s payments. The arrears to loan ratio remaining the same. We eventually cleared the arrears, but that still wasn’t enough for them to consider putting us back on to a better deal. The bank wanted us to maintain the higher repayment for an additional year to prove we could afford it. Let that sink in for a second… The bank, wanted us to CONTINUE to pay 60% more than a new deal, to prove that we could afford a new deal at a lower rate.
This is the twisted logic of the corporate banks at its most heinous. There are hundreds of thousands of people paying a higher monthly figure because the banks say they cannot afford to pay less! We were among them. We had no other problems with Santander and even had our dog agency business account with them. Yet, still, they refused to ease our situation by offering us a new deal. We were forced to overpay nearly £14K across a 30 month period. Money that could have gone into getting us back on track.
In reality, the bank’s decision had a direct effect on our family dynamic. As with many mortgage prisoners who are stuck on a higher SVR, we were living hand to mouth. There were no treats and certainly no luxuries. Life became a constant stream of worry and distress. The decisions of a bank to keep families stuck on a higher rate result in emotional damage as much as fiscal. When we challenged Santander on the legality and morality of their stance, they said the reasons were ‘commercially sensitive’ and hence couldn’t be disclosed. Unhelpfully, the FCA and the Ombudsman, to whom we had complained, accepted this.
Banks are not infallible. Very often they will try to get away with something for as long as they can, or until someone stands up. Santander offered its customers free banking for life at one point. When they went back on this, I took the situation to the Huffington Post. Those with free accounts were allowed to keep them after Santander backed down You can read about that here In this instance the bank said that they didn’t need to justify their position. Frankly, it seemed as if they didn’t care and knew they had us over a barrel.
We stood strong. We galvanized ourselves and diversified our secular lives, as explained earlier. Thankfully, in the darkest hours, we had help from both family and friends. These are the most important things in life. Today, we are covering the mortgage and we are finally on a lower rate. We are not out of the woods yet. We still find ourselves negotiating with unsecured creditors to lower payments to clear our remaining debts or maintain our repayment plans.
Of course, being at the mercy of the banks is never a comfortable position. Mortgage does mean “death pledge” after all. Our interest-only mortgage is due for repayment in September 2021 – we’re exploring options like equity release or lifetime mortgages so that we’re not forced to sell up the home we love.
It was never supposed to be this hard…