Mortgage Tie-in's

jbnorthlondon

Hi,

My fixed term mortgage is up this winter and I asked my bank (RBS), for information on other products for me to consider moving to. At first the advisor was going through the options, only to then put me on hold. She got back to me to tell me that in fact I was now tied in to a 1.2% above the base rate for a further year. To get out of this would cost me over £5000.00. I was shocked as I did not know this and no one in their right mind would tie themselves into a fixed 1.2% above the base rate in any climate let alone the one we face right now. It was also a shock to the RBS advisor who had never heard of such a product.

I bought into a three year fixed rate at 5.290% back in October 2005 which is obviously up on end of October 2008, not a three year fixed product with a 'hidden' extra fixed year. I had no prior knowledge of this further fourth year tie in until I called RBS a week ago, and I feel very mislead. This is not my first mortgage with RBS, I feel stunned at this part of their product that I was never made aware of.

I feel disgusted and very vulnerable that I am locked into a product that I have no control over, and could potentially cause serious hardship to my family and me, and I would like your advice as to the legality of this 'product' and the best way for me to move forward.

Thanks in advance for advice offered.

beecher

6.2% isn't that high so it shouldn't really cause you serious hardship. It is also a fairly competitive rate in the present climate.

dig out your mortgage offer from October 2005 as you must've been told about this tie in at the time in the illustration you were given. Look at the section 'what you will need to pay each month'

dunstonh

I had no prior knowledge of this further fourth year tie in until I called RBS a week ago, and I feel very mislead.

It would have been clearly documented. Product particulars, KFI and mortgage offer letter.

I feel stunned at this part of their product that I was never made aware of.

Did you buy it through a mortgage adviser or did you just go direct?

and could potentially cause serious hardship to my family and me

If you do then it's not the mortgage that is at fault. With respect, mortgage rates are still lower than long term average and if you cannot afford 6.2% then you have problems. Is this increase perhaps hiding a different problem you have in your budget and is this complaint of yours just a smokescreen for a wider problem?

I would like your advice as to the legality of this 'product'

"overhangs" are legal but you don't see them much nowadays. Like any product, it isn't the product that is at fault. It is how you bought it where any "error" could occur. If you didn't seek advice from a mortgage adviser, for example, then you cannot complain about advice. If you did, then you may have grounds for non disclosure. However, these terms are pretty well disclosed normally in multiple places. If you didn't see an adviser but just told RBS which mortgage you wanted or they supplied the options and you picked the one then you are liable for not knowing as you have bypassed the advice stage.

Toughluck

As dunston said it depends whether someone advised you to take on this product. If no-one advised you then you could complain how unlegla that practice was by RBS but the complaints and compliance staff would probably shrug it off and let you get on with it knowing youo have not got a leg to stand on.

If no disclosure (of the extended tie in) from an advised point of view took place then I'm afraid you'll have to trawl all the waby back through the paperowrk from 3 years ago and build a case. By the time it is settled you'll be out of the tie in period I reckon.

As someone said, depnedant on the equity in your home, 6.20% isn't really that bad considering rates will be going up in the next week anyway.