Mis-sold Mortgage Claims
The FSA (Financial Services Authority) paper, ‘Mortgage Market Review: Responsible Lending’, released in July 2010, identified mortgage mis-selling as a real issue that came to a head in the run up to the recession.
While millions of people have mortgages that they are very happy with, a significant number have been left in desperate situations following poor lending by mortgage companies. As such, many borrowers are struggling to meet their repayments and are facing significant arrears and even repossession.
So how did this happen? It appears that, in response to a rising number of mortgage complaint, the FSA found that brokers and lenders have been breaking the rules and lending money to vulnerable people who are not in a position to service their debt. If you feel you have been the victim of mortgage mis-selling Simple Financial Solutions are here to advise.
How to spot whether you’ve been mis-sold a mortgage
There are various ways in which mortgages have been mis-sold. These include:
- Interest Only Mortgages: Although these seem to be a cheaper option in the short-term, you will end up paying significantly more in the long-run. This should have been explained to you by your broker or lender. They should have also given examples of the cost of a Capital and Repayment mortgages and explained to you that you may have to switch your mortgage to a Repayment mortgage at some stage.
- Repayment Investments (such as Endowment Policies): Such investments are designed to pay off the mortgage when it is finished however there are cases when they fall short and a further lump sum is required.
- Debt consolidation: If you were advised to move all your loans and credit cards etc. onto your mortgage but were not informed that, although your monthly outgoings would be initially lower you would be lengthening the term of your debt and increasing the interest, this is a form of mortgage mis-selling.
- Affordability: Was your household budget assessed along with your income and various outgoings, therefore working out your ‘disposable income’? It should have been – if it wasn’t then you may well have been sold a product you couldn’t afford.
- Self-Certification: You may have been encouraged to take out a ‘Self Cert’ or ‘Fast Track’ mortgage – popular with brokers due to their high commission – despite being able to prove your income with through payslips or audited accounts.
- Your mortgage post-retirement: Do you know if your mortgage will run past your retirement? If so, do you know how you will meet the repayments?
- Right to Buy Mortgages: Under the ‘Right to Buy’ scheme, many people have been unaware that their mortgage payment would be much higher than their rent, that they would become responsible for maintenance costs and that they would lose their Housing Benefit.
- ‘Sub Prime’ Mortgages: These mortgages, which cost more than those on the high street, are recommended for borrowers who have a poor credit history, CCJ’s or low credit score. You may well have been advised to purchase one even if your credit rating was fine.
- High broker fees: Did you pay an unreasonably high fee to your broker? Did you know how much it would be or was it added to your mortgage without you knowing thus meaning you are paying interest on it?
So what now?
If you were clearly sold a mortgage that wasn’t suited to your personal finances and circumstances or you have been mis-treated by your lender or broker in some way, then Simple Financial Solutions can assist you with a mis-sold mortgage claim. For a no obligation chat with our expert advisors call us now on 0800 043 2027.