Mis sold mortgage

Jizz_Bun

I took out a mortgage through a broker who was also a work colleague so I trusted him. I told him to get me a 2 year fixed interest only as I wanted to renovate a property to sell. The broker secured a mortgage through N Rock.

2 years is up and I want to sell but find that the mortgage is not 2 years fixed but 5 year fixed. I'm now faced with £3500 early repayment charges.

I believe the broker thought it was a 2 year fixed because the company he works for keep sending me reminders that my fixed rate is coming to an end and that I should think about remortgaging. Obviously my mortgage has been logged with his company as a 2 year fixed.

What can I do?

happybroker

check all of your paperwork. The key facts illustration that you received from the broker should match the offer from NR, if it doesn't it should of been checked by both you and him and raised as an issue.

if it does, and was a 2 yr fix on the offer then obviously the Rock will have to sort that out for you. if both show a 5 year fix and your recommendation letter from the broker shows this also then you would have to start a formal complaint with the brokerage who will investigate accordingly and use the fact find document to confirm the conversation you had with your adviser.

You could ask them to send you a copy of the fact find before you do this but they may charge you for releasing the data. If the fact find shows you asked for a 5 year fixed rate and that's what you ended up with then it's a bit of "your word against theirs" and you would then escalate your complaint.

The initial disclosure document, key facts illustration and mortgage offer should tell you how to go about making a complaint.

All the best

dunstonh

It may not be a mis-sale but a simple clerical error. All that needs to be done is for the broker to check the application form (which they hold copies for) and see what the fixed term applied for is. They can also check the KFI that was issued to see what terms were on that and check the mortgage offer letter which you would have to have signed. All those things show the terms of the fixed rate.

If the paperwork shows 2 years then NR will have to correct it. If it all shows 5 years then there is nothing you can do about it. You may be right or wrong but you have no chance proving it when everything says 5 years. If you complained you would just look like someone who is trying to get out of a 5 year fix early without paying an ERC.

EdInvestor

Is the 5 year deal a good cheap one? (you should be so lucky at N.Rock)

If so, it might be a good idea to stick with it and rent out rather than sell - it's very hard indeed to sell in the current market.It's easy to let though and in many areas rents are rising due to increased demand from tenants who can't get mortgages so can't buy.

HelpWhereIcan

My response would combine all the others you have received so far.

By that I mean that you should carefully consider whether you want to try and sell in the current climate. It may pay to continue in the property (or to rent it out) to await more favourable selling conditions.

If that is the best thing, then it is likely that you will be better off on your current deal with Northern Rock than you would be able to get elsewhere in the market and it will be a blessing in disguise that the term of the deal is longer than expected. 2 years ago NR offered some of the best 2-5 year fixed rates in the market and many would be glad to have one of them now.

Don't forget that the mortgage will also be portable meaning that if you buy another house, you should be able to transfer the mortgage to the new property (subject to meeting current criteria) and again as the deal you have is likely to be significantly better than currently available, you are highly likely to have gained from the error.

However, if you decide that selling and not buying a new property is something you want/have to do now then you are within your rights to complain that the mortgage you received was not the one you expected or asked for.

As has been said, compare the offer and illustration. If they differ you have a complaint (even if the adviser says you should have checked the offer thoroughly it is legitimate for you to rely on the adviser checking it for you).

As dunstonh says, if they all show 5 years you will have to prove that the adviser knew of your requirement for a 2 year deal and that is best proved through your copy of the factfind and reasons why letter.

The Financial Ombudsman judges complaints on the balance of probability so having evidence that you planned to sell after 2 years will help you with them.

What you may find hard to quantify is your loss. You can only be compensated for the actual early repayment charges you pay so that may be something that is unknown until you actually sell.

In the meantime, it could be argued that the longer you take to sell, the more you save by being on your current deal rather than Standard Variable Rate or having paid the costs of remortgaging and you may find that any potential compensation reward is reduced by the month.

Your first port of call is the adviser firm to see if they can get the situation clarified for you. If you look to be losing out because they have set up your mortgage incorrectly and contrary to your instructions and the documentation provided, make a complaint to them.

It may also be worth asking Northern Rock if they will allow you to repay the mortgage and waive the charges (a long shot, but always worth it given the circumstances).

Good Luck