miss sold mortgages

fishes2 · 5 February 2011 at 11:15AM

Hi, Can anyone advise as to my partners mortgage which was taken out as an interest only mortgage 5 years ago. His age at the time was 47 and this is a 25 year mortgage term which will run until he is 73 years old. He does not have a private pension or any way of paying this mortgage once retired. He was advised, by an independant financial advisor that this was his best option as house prices wil rise and the equity wil pay for the house. Does the term of this mortgage count as a miss sold debt?

tifo · 5 February 2011 at 12:06PM

possibly. I think a mortgage can only run until retirement age, which would have been 65 then. So the max term should have been 18 years.

Dave101t · 5 February 2011 at 12:10PM

its more unlikely tho, if he accepted the terms without false information given

BoGoF · 5 February 2011 at 12:15PM

tifo wrote: »

possibly. I think a mortgage can only run until retirement age, which would have been 65 then. So the max term should have been 18 years.

Sorry, but that's not the case.

tifo · 5 February 2011 at 12:16PM

fishes2 wrote: »

He was advised, by an independant financial advisor that this was his best option as house prices wil rise and the equity wil pay for the house.

Seems that he was told that house prices will rise and that by the time he is 65 the equity will be considerable.

Now if house prices have fallen and the estimated price in some years is lower than expected, what then?

Burridge60 · 5 February 2011 at 12:42PM

fishes2 wrote: »

5 years ago

He will have had some paperwork at the time setting out why this mortgage was suitable. It would state the amount being borrowed, his deposit and the term of the mortgage and the repayment method and then go on to state why each is suitable.

This letter should deal with the reasons why he was doing interest only and the length of the term and that it goes beyond State Normal Retirement Age (NRA).

It could have been that he was intending to pay off the mortgage from his equity in the future prior to retirement date and downsize. He may have indicated he would rent the property out and buy another home for himself. He might even have said he wasn't that bothered as he expected to inherit some money. Some have even tried to tell me they do the lottery!

I doubt that you will find it written that an IFA would advise that properties will increase massively over the term as they aren't fortune tellers and wouldn't even suggest this for a Unit Trust investment so why would they do so for a house.

I am sure if you look hard enough you will find this paperwork and it will answer your questions. As you are not a party to the mortgage you are having to rely on his recollection of events from the perspective of someone with a large loss in their house value. If you had been there at the time your joint recollection may have helped but the paperwork should help to confirm it.

It also seems strange that an interest only mortgage over 25 years was arranged when an interest only mortgage to age 65 would have cost the same each month. It must therefore rest on other reasons for this term than just the arbitrary nature of 25 years being "normal".

fishes2 · 5 February 2011 at 12:45PM

thanks for the replies.The house is 3 bedroomed terrace so even if house prices increased alot it still would not probably cover the mortgage. There is no proof of the financial advice so I thought maybe we had a complaint against the lender for irrisponsable lending as we are now trying to change the terms of the mortgage and transfer it to joint names and they have refusd.

fishes2 · 5 February 2011 at 12:53PM

He has paperwork stating the terms of the mortgage and also the large fee which was paid to the IFA, but none to explain the reasons for the terms.There is no large financial loss in the property and we are not trying to claim finacial loss, just trying to secure the future and pay for the house.

tifo · 5 February 2011 at 1:07PM

fishes2 wrote: »

partners mortgage which was taken out as an interest only mortgage 5 years ago.

As the IFA/lender would need to keep docs for 6 years, why don't you do a DSAR and see what they come up with? You might find things in there to determine whether you have a case of misselling.

dunstonh · 5 February 2011 at 1:19PM

Mortgages can go past retirement age. For an IFA to cover their backs on this one, they only have to document that going past retirement age was discussed and that there were concerns about affordability and that the buyer was insistent on proceeding with the purchase despite this. The ideal requirement is to have evidence of affordability (like a pension) but people are allowed to overrule the advice they are given.

It also seems strange that an interest only mortgage over 25 years was arranged when an interest only mortgage to age 65 would have cost the same each month. It must therefore rest on other reasons for this term than just the arbitrary nature of 25 years being "normal".

that bit stood out for me as well. This indicates that 25 years was chosen for a reason.

ILW · 5 February 2011 at 2:08PM

fishes2 wrote: »

He has paperwork stating the terms of the mortgage and also the large fee which was paid to the IFA, but none to explain the reasons for the terms.There is no large financial loss in the property and we are not trying to claim finacial loss, just trying to secure the future and pay for the house.

If you wish to pay for the house, start making capital payments. It will not pay for itself.

miss sold mortgages

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