Mis-sold secured loan??

LynseyR_2

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.

DVardysShadow

The problem this causes is that because the loan is secured, the lender can prevent the sale of the house if the loan is not covered. If you had been refused a secured loan, you would presumably be free to move house.

So, don't get your hopes up! You were mis-sold secured rather than unsecured, you are not arguing that you were mis-sold a loan at all as far as I can see. So the remedy you should look for is that the loan is converted to unsecured, not that it is written off.

LynseyR_2

DVardysShadow wrote: »

The problem this causes is that because the loan is secured, the lender can prevent the sale of the house if the loan is not covered. If you had been refused a secured loan, you would presumably be free to move house.

So, don't get your hopes up! You were mis-sold secured rather than unsecured, you are not arguing that you were mis-sold a loan at all as far as I can see. So the remedy you should look for is that the loan is converted to unsecured, not that it is written off.

Hi, thanks for your reply. I had never even thought of it until this colleague got me thinking. I appreciated the help this company gave me at the time, because I was quite literally, in Dire Straits at the time. Out of all companies, these have been the most helpful ie. advice, support, payment breaks and overall customer service etc.

With having given me the loan based on wrong input (actual value) when we tried to tell them otherwise led me to believe what this guy was saying was true. Essentially because of this, it makes it harder for us to move which wasn't even a consideration at the time - we were going to stay for the full 5 year duration hence not having to pay the council back a penny. We'd planned to do the house up, live happily for at least the 5 years and get onto the property ladder with some decent financial gain in our back pocket.

Things changed however, very dramatically. I would love to stay here, but every 'option' is not practical, and we're basically robbing Pete to pay Paul and I hate that. One blip in your financial matters, and the ripple effect can be huge, as we're currently finding out. They helped us out at the time, but as you stated, they would almost certainly prevent sale of the house. I just wish now I had been refused the loan! Argh...we're stuck!

On a happy note though, got a letter Saturday from a company offering us £2000 for missold PPI packages! Only pays what I owe them however, but hey, one less debt!

Still waiting on another 3 companies, so fingers crossed. Once I'm debt free, or at least more than able to fulfill payments, the champers comes out, and two fingers to credit!

milliemonster

Hi Lynsey, I hate to sound negative but I feel you are clutching at straws, you bought your house only a few years ago, ended up in financial straits and managed to get a secured loan, but you are now in financial straits again forcing you to sell the house and want the loan written off??? I think you need to sit back and take a look at what is happening to cause you to get into a mess so often that you are having to take such drastic measures.

Why don't you post up your SOA and we can see where you may be able to cut back in order to keep your house?

In a perfect world if you managed to sell and started renting somewhere cheaper, what has changed that would stop you getting into a financial mess again in the future???

LynseyR_2

milliemonster wrote: »

Hi Lynsey, I hate to sound negative but I feel you are clutching at straws, you bought your house only a few years ago, ended up in financial straits and managed to get a secured loan, but you are now in financial straits again forcing you to sell the house and want the loan written off??? I think you need to sit back and take a look at what is happening to cause you to get into a mess so often that you are having to take such drastic measures.

Why don't you post up your SOA and we can see where you may be able to cut back in order to keep your house?

In a perfect world if you managed to sell and started renting somewhere cheaper, what has changed that would stop you getting into a financial mess again in the future???

I'll admit, I am clutching at straws. I did not go looking for ways to concoct a plan to get my debt written off - I just wondered if there was any truth in what I had been told. If I could write the debt off, I would, and I'm being brutally honest there. I am quite capable of being just as callous as a lot of companies out there! I only think of my kids now, and if I can make it better for them, I will, whatever it takes. I draw the line at anything illegal of course!

I already have a financial plan in place via the CAB, yet some companies are refusing to co-operate.

What would stop me getting into financial mess in future? No more credit! The only credit I have ever had was for solutions and not pleasure. I've also had some pretty bad luck over past 3-4 years which has not helped.

milliemonster

I think one of the best solutions to your debt problem here, and I speak from painful experience!, is to stop looking for quick fix solutions, there aren't any, and tackle your debt head on. We have been doing this for the last 18 months and look at my sig to how far we have come. Before that we just consolidated etc etc and it never stopped me getting credit, we started off with a £40k mortgage, with the house we have now, if hadn't have consolidated so much and run up so much debt we would be mortgage free, instead we have a £150k mortgage and still the debt.

The last 18 months have taught me so much, I have completely stopped looking for 'solutions' and realised the only real solution is a lifestyle change and living within my means, this is what has helped us reduce our debt so much.

Please think about putting up an SOA, I really don't know the possibility of you getting your loan written off, I would think that it would involve a lengthy legal battle which in itself could cost you as much in fees as your loan is so you would still be no better off, please don't go to one of these 'companies' that offer you the world and rarely deliver (without it costing you) I see from your other thread you have already endured these cretins in the past.

You have to take responsibility now, face up to it, there are no short cuts, no easy ways out without hard work