100% Mortgage Lender default protection

klsONE
klsONE Posts: 2 Newbie
in Mortgages & endowments
Just wanted to check this with you all and get your opinions.

I took out a 100% mortgage in 2007, as it was 100% i was told i had to take out a £3k insurance to cover the lender against losses if I was to default. The 3k was added to the mortgage amount.

It never really sat well with me but at the time I didn't really have a choice of lenders I could go with, I am with another lender now, and never missed a payment. I just wanted to get your opinion if I would be able to claim any of this money back?
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Comments

  • Edi81
    Edi81 Posts: 1,444 Forumite
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    No. It was a condition of the mortgage that you were advised about.
    No misselling here.
  • amnblog
    amnblog Posts: 12,433 Forumite
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    edited 19 January 2018 at 9:43AM
    The insurance fee enabled you to purchase without a deposit.

    It would have been clearly outlined in your paperwork as a condition of the Lending.
    I am a Mortgage Broker

    You should note that this site doesn't check my status as a Mortgage Broker, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.
  • ACG
    ACG Posts: 23,720 Forumite
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    It was fairly common in the past that anything above 75% LTV would have had the policy. I think it started to get phased out around 2007, but there is nothing wrong with it in principle.

    You knew about it.
    You had no deposit, so not in a position to pay it upfront.
    You made the choice to proceed anyway.
    I am not exactly sure where the problem is, other than you did not like it. Not liking something but proceeding anyway is not a miss sale.
    I am a Mortgage Adviser
    You should note that this site doesn't check my status as a mortgage adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.
  • silvercar
    silvercar Posts: 46,945 Ambassador
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    Hi klsONE and welcome to the forum.

    It seems you have some quick responses, even if they weren't quite what you hoped to hear. Hopefully, it puts your mind at rest that there isn't anything worth claiming for.

    Always worth asking, as on the face of it there are similarities with the PPI scandal.
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  • Brock_and_Roll
    Brock_and_Roll Posts: 1,207 Forumite
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    Funnily enough, when I was young and naïve taking out my first mortgage, I was persuaded to take out such a policy by my best mate (who also happened to be the insurance salesman).


    It did rankle with me at the time (as a banker myself) that I was paying the "insurance premium" for the bank that was supposed to be taking the risk. But hey ho, they lent the money and all was forgotten.


    Years later he admitted to me that he thought the whole thing was a bit of a rip off and the only reason he sold it to me was to get his hands on £3k of commission which was a large percentage of the cost!


    I then got my revenge by stealing his girlfriend, but then we both left bewildered & amused when she then ran off and married another woman!
  • ACG
    ACG Posts: 23,720 Forumite
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    Brock_and_Roll wrote: »


    It did rankle with me at the time (as a banker myself) that I was paying the "insurance premium" for the bank that was supposed to be taking the risk. But hey ho, they lent the money and all was forgotten.
    Chances are the rate would have been higher if you had not paid the insurance?

    Nice mate btw, he should have at least split it with you.
    I am a Mortgage Adviser
    You should note that this site doesn't check my status as a mortgage adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.
  • klsONE
    klsONE Posts: 2 Newbie
    Thanks for the quick responses! Its better to ask and know for sure. I didnt think there would be any recourse as the figure was written into the mortgage paperwork from the lender but like i said i it just never sat quite right with me. At least i know now and can draw a line under it!

    I guess i could go and see what my mortgage adviser's wife looks like 10 years later, i am into the more mature lady!
  • kingstreet
    kingstreet Posts: 38,754 Forumite
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    Commission was never paid to brokers on MIG as it was a mandatory lender issue.

    Most of the time the lenders kept the money and self-insured.

    I have no idea who B_and_R's advisor was paid for it. You sure it wasn't single premium ASU added to the loan?
    I am a mortgage broker. You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice. Please do not send PMs asking for one-to-one-advice, or representation.
  • ACG
    ACG Posts: 23,720 Forumite
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    kingstreet wrote: »
    Commission was never paid to brokers on MIG as it was a mandatory lender issue.

    Most of the time the lenders kept the money and self-insured.

    I have no idea who B_and_R's advisor was paid for it. You sure it wasn't single premium ASU added to the loan?

    Might have been a bank advisor paid commission on the sale of it? It was well before my time as an advisor so I could be miles out.
    I am a Mortgage Adviser
    You should note that this site doesn't check my status as a mortgage adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.
  • Brock_and_Roll
    Brock_and_Roll Posts: 1,207 Forumite
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    ACG wrote: »
    Might have been a bank advisor paid commission on the sale of it? It was well before my time as an advisor so I could be miles out.


    'Twas a long time ago chaps, circa 1994....a lot of wine, women and cash has passed under the bridge since then!


    If I recall, I think it was the case that I could only have a 95% mortgage if I paid for the policy to protect the bank. I think my mate worked directly or indirectly selling insurance for the bank, which I think was Lloyds.
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