We’d like to remind Forumites to please avoid political debate on the Forum.
This is to keep it a safe and useful space for MoneySaving discussions. Threads that are – or become – political in nature may be removed in line with the Forum’s rules. Thank you for your understanding.
📨 Have you signed up to the Forum's new Email Digest yet? Get a selection of trending threads sent straight to your inbox daily, weekly or monthly!
The Forum now has a brand new text editor, adding a bunch of handy features to use when creating posts. Read more in our how-to guide
Mis-sold secured loan?
Hi board, hoping someone with some knowledge can shed some light on this issue.
Have spoken to someone at work about my secured loan and on the basis it was given to us. Because of the circumstances, apparently 75% of the loan could possibly be written off.
I'll do my best to explain as simple as I can. In 2006, we bought our council house through the Right to Buy scheme with a discount. If we move within 5 years, a fraction of the house value (same quite complex formula based on when discount was calculated)would have to be paid back to the council. After 1 year, we'd pay 4/5, after 2 years 3/5 and so on.
We took out the loan in 2008, and when they did an online house value check, our house according to this system check was put through as valued at £104,000. Right away, we told them this was wrong as the house was in early stages of DIY, and even when completed, no way could we expect to get that much for it. I wish!
At the time, if we sold house, say for £70,000 (which I estimate we would have been looking at for sale price) we would have had to give back approx. £58,000 to mortgage company, 3/5 of house (which is 32% of £70,000 divided by 5 multiplied 3 which means essentially we would owe the council £13,440)! Just paying the mortgage and council tax would have left us out of pocket by almost £2k.
Thus this next point raised by my colleague. The secured loan should never have been given to us with negative equity in the house. We also pointed out to the sales woman for the loan that we'd have to pay a fraction of the sale to the council if we leave within 5 years, and she said this was fine as the computer says that the house is valued at over £104,000 and that if their system says it is fine for the loan to go ahead, then she is happy to proceed. At the time, we weren't going to argue, as we desperately needed the money.
However, now we have no other option but to move, but feel stuck as we won't have the money to pay off the mortgage, council discount and the secured loan. It's a really stressful situation, and if 75% of the loan could be written off because of this, it would be a huge weight lifted off our shoulders, and we'd be free to start afresh, and a big FAT NO to credit!
Can someone confirm if this is true or not; is it really a mis-sold loan that can be disputed? Thanks for reading, and thanks in advance. Any advice/info greatly appreciated.
Have spoken to someone at work about my secured loan and on the basis it was given to us. Because of the circumstances, apparently 75% of the loan could possibly be written off.
I'll do my best to explain as simple as I can. In 2006, we bought our council house through the Right to Buy scheme with a discount. If we move within 5 years, a fraction of the house value (same quite complex formula based on when discount was calculated)would have to be paid back to the council. After 1 year, we'd pay 4/5, after 2 years 3/5 and so on.
We took out the loan in 2008, and when they did an online house value check, our house according to this system check was put through as valued at £104,000. Right away, we told them this was wrong as the house was in early stages of DIY, and even when completed, no way could we expect to get that much for it. I wish!
At the time, if we sold house, say for £70,000 (which I estimate we would have been looking at for sale price) we would have had to give back approx. £58,000 to mortgage company, 3/5 of house (which is 32% of £70,000 divided by 5 multiplied 3 which means essentially we would owe the council £13,440)! Just paying the mortgage and council tax would have left us out of pocket by almost £2k.
Thus this next point raised by my colleague. The secured loan should never have been given to us with negative equity in the house. We also pointed out to the sales woman for the loan that we'd have to pay a fraction of the sale to the council if we leave within 5 years, and she said this was fine as the computer says that the house is valued at over £104,000 and that if their system says it is fine for the loan to go ahead, then she is happy to proceed. At the time, we weren't going to argue, as we desperately needed the money.
However, now we have no other option but to move, but feel stuck as we won't have the money to pay off the mortgage, council discount and the secured loan. It's a really stressful situation, and if 75% of the loan could be written off because of this, it would be a huge weight lifted off our shoulders, and we'd be free to start afresh, and a big FAT NO to credit!
Can someone confirm if this is true or not; is it really a mis-sold loan that can be disputed? Thanks for reading, and thanks in advance. Any advice/info greatly appreciated.
0
Comments
-
In 2006, loans were easy to get and plenty of lenders were willing to bend the rules to give you what you wanted - now you would probably have no chance of getting a similar loan BUT that doesn't make the one you have any less valid. You are not going to get it written off....sorry0
-
this is not a mis sold loan though, is it?
At the time of taking it out, you knew it was secured against the house; you knew what the mortgage was; you knew the terms of repayment if you sold up early.
It's not the lenders fault your circumstances changes and you are selling up early.
Where, exactly, do you feel you have been misled?Debt free 4th April 2007.
New house. Bigger mortgage. MFWB after I have my buffer cash in place.0 -
In 2006, loans were easy to get and plenty of lenders were willing to bend the rules to give you what you wanted - now you would probably have no chance of getting a similar loan BUT that doesn't make the one you have any less valid. You are not going to get it written off....sorry
Hi, thanks for the reply. If it makes any difference, it was the mortgage I got out in 2006, and the loan in 2008. Would basing the loan agreement on incorrect details, even when we notified them of that, simply be regarded as 'bending the rules'?0 -
It isn't what you want to hear, but I believe Emmzi is right ....where exactly do you think you were misled ?
You knew how the figures worked out, but you still took the loan anyway ...0 -
this is not a mis sold loan though, is it?
At the time of taking it out, you knew it was secured against the house; you knew what the mortgage was; you knew the terms of repayment if you sold up early.
It's not the lenders fault your circumstances changes and you are selling up early.
Where, exactly, do you feel you have been misled?
We told them before the loan all of the correct information, however, they still proceeded with the loan having the house recorded as over £100,000 in value when we clearly stated it was nowhere near that amount. So, before the loan was even agreed, the woman knew there was incorrect information submitted - contradictive of what we had told them.
None have my circumstances have changed, they changed them for me!0 -
It isn't what you want to hear, but I believe Emmzi is right ....where exactly do you think you were misled ?
You knew how the figures worked out, but you still took the loan anyway ...
Believe me, I now see so many errors of my ways, but at the time, it was essential as I had a series of very unfortunate events that put immense pressure on me.
If I could, I'd sell up and pay everyone and take it on the chin as one hell of a bitter experience and learn from it. At the moment, I'm stuck with no obvious solution.0 -
even when we notified them of that, simply be regarded as 'bending the rules'?
Sorry, you colleague is talking out of his behind.
The loan companies set the lending criteria so are bending their own rules, They were happy to lend against a house that was over-valued and you accept that at the time. No doubt when you took out the loan they thought the house value would increase.Accept your past without regret, handle your present with confidence and face your future without fear0 -
peachyprice wrote: »Sorry, you colleague is talking out of his behind.
The loan companies set the lending criteria so are bending their own rules, They were happy to lend against a house that was over-valued and you accept that at the time. No doubt when you took out the loan they thought the house value would increase.
Thankyou, that actually makes sense. Just wanted to know where I stood on this issue - never really thought about it, but this guy got my cogs grinding!0 -
The loan company will lend based on thier valuation of the property's worth, not yours, or an estate agents.0
-
Typhoon2000 wrote: »The loan company will lend based on thier valuation of the property's worth, not yours, or an estate agents.
I thought at the time they would send someone out to value the house but they all they did was an online check.
I was intending on staying in the house for the full 5 year duration ie. not having to repay any council discount. One of the many pitfalls of my situation was an unplanned pregnancy. We live in a two bedroomed small house, hardly any storage space (which we planned on creating during the DIY process) with a 6 year old daughter and 18 month old son. Things are a tad cramped!
I suppose I should get in touch with the council and explain the situation and hopefully defer 50% of the 'pay back' until a later date, or at least explore my options with them.0
This discussion has been closed.
Confirm your email address to Create Threads and Reply
Categories
- All Categories
- 354K Banking & Borrowing
- 254.3K Reduce Debt & Boost Income
- 455.3K Spending & Discounts
- 247.1K Work, Benefits & Business
- 603.7K Mortgages, Homes & Bills
- 178.3K Life & Family
- 261.2K Travel & Transport
- 1.5M Hobbies & Leisure
- 16.1K Discuss & Feedback
- 37.7K Read-Only Boards