Mis Sold Mortgages UK – Get The Compensation You Deserve
How would I know if I have been mis-sold my mortgage?
In July 2010, the FSA (Financial Services Authority) released a paper entitled ‘Mortgage Market Review: Responsible Lending’. This was following several consultation papers undertaken from 2008 onwards which had highlighted the growing number of mis-sold mortgages and the
UK wide problems of mortgage mis-selling as a whole. The mortgage market had worked well for many people over the years and the vast majority of mortgage borrowers have not had their mortgage mis-sold to them. However, in the run up to the recession, it became apparent that there was a trail of poor lending to borrowers who would later come to struggle to repay their mortgage commitments. Many of these people would find themselves in default of their mortgages, facing the distress of significant arrears and repossession.
Many mortgage complaints started to arise as a result and this has become an area of growing concern for the FSA who realised that many mortgage brokers and lenders were deliberately flouting the strict rules (MCOB) laid down by the FSA in 2004. This raft of mortgage complaints highlighted the cause of many mis-sold mortgages. Many vulnerable clients have been placed in major economic distress who, through no fault of their own, found themselves unable to meet their mortgage payments.
Here are the types of issues that have led to mis-sold mortgage complaints and which have caused specific concern for the FSA:
Interest Only Mortgages:
Are you only paying the interest on your mortgage each month? Do you know how you will repay your mortgage when it finishes? Did your broker or lender even discuss this with you? Did your broker or lender give you examples of the cost of a Capital and Repayment mortgage compared to the lower costs of an Interest Only mortgage? Was it explained to you that you may have to switch your mortgage to a Repayment mortgage rather than relying on rising house prices?
Badly advised repayment investments:
These sometimes go hand in hand with poorly advised interest only mortgages. Were you advised to take out an investment designed to pay off the mortgage when it finished and you have since found out that wont pay out enough? Common examples are endowment policies.
Did you remortgage to clear existing debts? Debt Consolidation:
Were you advised that it would be cheaper for you to put all your loans, credit cards and finance onto your mortgage? Did you realise that you were exchanging short term debts for a long term debt by adding it to your mortgage. Was explained to you that although you would be lowering
your monthly outgoings initially, you may well be lengthening the term of your debt and vastly increasing the amount of interest you were paying.
Did your broker or lender complete a household budget analysis? Where you asked how much your monthly income was, what your outgoings were (Council Tax, Gas, Electricity bills etc) and did they work out what your ‘disposable income’ was? (How much money you had left over each month after paying all your bills.) If this was not done, you may have unknowingly over committed yourself to a mortgage that you couldn’t afford.
Self Certification – Were you required to prove your income:
Did you have payslips or audited accounts (if you were self employed) that could prove your income and yet you were encouraged to take out what is known as a ‘Self Cert’ or ‘Fast Track’ mortgage where you did not need to prove your income? These mortgage products paid far higher commissions and were very popular amongst some brokers for that very reason. If this applied to you, your mortgage may well have been mis-sold to you.
Your mortgage is due to finish after your Retirement age:
Is your mortgage due to run past your retirement age? Was this pointed out to you? Did your broker or lender discuss how you would meet your mortgage payments once you were retired?
Right to Buy Mortgages:
Many clients who took out mortgages under the ‘Right to Buy’ scheme were unaware of the consequences of swapping paying rent for paying a mortgage. Often it was not explained to them that in many cases their mortgage payment would be significantly higher than their rent, that they would lose their Housing Benefit and that they would be responsible for the maintenance costs of their home. If this applies to you, you could have been mis-sold your mortgage.
You were sold a “Sub Prime” mortgage:
Sub Prime mortgages are often the only option for borrowers who have a poor credit history, CCJ’s or low credit score. They are often more costly than high street mortgages with major lenders. Were you recommended a sub-prime mortgage when there was nothing wrong with your credit history and you had never been refused credit before?
High Broker Fees:
Did you pay unreasonably high fees to the broker or advisor that arranged your mortgage? Were you made aware what the fees would be. Were they added to your mortgage without you knowing so that you are now paying interest on them every month?
And More Generally:
Was your mortgage suitable?
Were you sold a mortgage that wasn’t suited to your personal finances and circumstances at the time?
Were you treated fairly?
Lender and mortgage brokers have an overriding obligation to treat their customers fairly. It may be that you feel you have a specific complaint as to why you believe you were treated unfairly.