bad mortgage advice compensation?

thebrowski

Hi,
7 years ago my wife (then girlfriend) took out the worlds worst mortgage with the HSBC - we have been paying back "backbreaking" monthly payments every month since on a 10 year fixed period.

While friends with similar 'total' loans were paying as maximum £500 a month and minimum £18!!!! we were paying £1800!!!!

We really feel that we were poorly advised by the bank and it has crippled us ever since - we cant get out because of the ERC- but we took this mortgage at their advice completely!!

Would we have a case to ask for help/compensation if they have advised us badly (which they clearly have)....?

Thanks!!

beecher2

your friends are probably on interest only, tracker mortgages. They might not be so happy when rates increase again, and certainly aren't likely to be as vocal about what they are paying.

Presumably you chose a fix for a reason and didn't expect base rates to fall as much as they did. If rates hadn't gone down you'd probably be on a winner - sounds like this is a gamble which hasn't paid off but can't see how you are due compensation.

opinions4u

thebrowski wrote: »

7 years ago my wife (then girlfriend) took out the worlds worst mortgage with the HSBC - we have been paying back "backbreaking" monthly payments every month since on a 10 year fixed period.

Why did she agree to take the loan on if the payments were "backbreaking"? They haven't changed since, have they?

While friends with similar 'total' loans were paying as maximum £500 a month and minimum £18!!!! we were paying £1800!!!!

Ok, so what's the fixed rate on the HSBC loan and what are the variable rates?

We really feel that we were poorly advised by the bank and it has crippled us ever since - we cant get out because of the ERC- but we took this mortgage at their advice completely!!

Ok, "interest rates falling" will not succeed if you file a complaint for a mis-sold loan. You need a stronger reason.

Turn the clock back 7 years - the scenario may be something like this:

10 yr fix: £1800 a month.
2 yr fix: £1600 a month.
2 yr tracker: £1500 a month, but will vary.

You are asked the question "how would you feel if interest rates increased sharply?" and give an answer along the lines of "it would be a struggle". The adviser then says "I'd recommend a 10 year fixed rate deal because you are concerned about possible rises in interest rate". It's a strong reason to sell a long term fix.

Would we have a case to ask for help/compensation if they have advised us badly (which they clearly have)....?

In what way has the loan been badly sold?

Before you pursue a complaint, you need to be clear on this.

(I'm not sure mortgage sales were actually regulated in 2003, so that may be another difficulty for you).

GMS

This is the problem with long term fixed deals. Had rates risen as sharply as they have fallen you would be sitting back thinking it was the best thing to do. Trackers are a gamble which can sometimes pay off.
This also highlights why banks are not the best option. They will only offer their own products.
A 'whole of market' broker can be worth a visit as they will search across the board.
It would be difficult to get anything from them by was of being badly advised, infact you will probably find it was a non-advised sale where by they told you the product and you chose it yourself.

dunstonh

Would we have a case to ask for help/compensation if they have advised us badly (which they clearly have)....?

You have mentioned nothing in your post that remotely suggests any mis-sale or wrong doing.

So, what is it that you feel you were mis-sold on?

If its just a fixed rate you are complaining about then that will never win a complaint. Fixed rates give certainty of payment. They do not guarantee lowest rates. If rates had doubled, your wife would still have paid the same. So, you cant have your cake and eat it. Many people in the 90s on variable rates saw their mortgage rates double or even treble whilst those on fixed rates were protected.

So, given that its pre M day (mortgage regulation) and you have given no grounds for complaint in your post, why do you think it was mis-sold?

<seriously biting tongue on this one as at the moment this looks like compensation culture rearing its ugly head>

Senior_Paper_Monitor

"we were poorly advised by the bank"

I continuously wittle on about this - but I suspect she was not 'advised', you were 'sold to' !

Unfortunately the perpetually confused FSA continues to whittle on about regulation and advice and ignores (therefore the public are unaware of) this significant exemption for the banks and their so called advisers to this day.

A discussion with a real advisor would have made your wife to be aware of the possible implications (the ones that several contributors above draw to your attention above) - it would/might not have stopped your then girlfriend taking the mortgage, but she would hopefully recall the 'advice'.

However - in short, she chose wrong and that is not going to get anyone compensation (additionally the whole moprtage market was unregulated at that time so 'bad advice' simply didn't exist).

jamesd

thebrowski wrote: »

7 years ago my wife (then girlfriend) took out the worlds worst mortgage with the HSBC - we have been paying back "backbreaking" monthly payments every month since on a 10 year fixed period.

While friends with similar 'total' loans were paying as maximum £500 a month and minimum £18!!!! we were paying £1800!!!!

All repayment mortgages, with the others on 25 year terms and you on ten year? That sort of term difference would produce a much higher monthly payment at the same interest rate.

thebrowski wrote: »

we cant get out because of the ERC

Say more about the ERC, particularly about how the rate cahnges over time and what value the ERC is charged on, like the remaining capital balance owed. It's entirely possible that it's both practical and sensible to pay it if these payments are causing you trouble.

What is the fixed interest rate?

A fixed deal like this would be appropriate for someone who said that they wanted the mortgage cleared as fast as possible and who wanted certainty about what the monthly payments would be. Did those things apply?

If the ERC does make it impractical to change mortgage deal, it's possible to consider options like personal loans or secured loans that would cover part of the monthly payments and reduce the monthly payments, at the cost of paying more money over a longer time.

If we know more of the facts it'll be possible to consider what solutions might exist and whether those might be sensible.

magpiecottage

Senior_Paper_Monitor wrote: »

she chose wrong and that is not going to get anyone compensation

I agree - if she made an informed decision she will not be entitled to compensation simply because, with the benefit of hindsight, it was wrong - otherwise we could all do the lottery each week and claim a refund if we didn't win!

Senior_Paper_Monitor wrote: »

additionally the whole mortage market was unregulated at that time so 'bad advice' simply didn't exist).

That is not strictly true. HSBC subscribed to the Mortgage Code and the borrower could complain and take it to FOS but I doubt they would win.

bendix

thebrowski wrote: »

Hi,
7 years ago my wife (then girlfriend) took out the worlds worst mortgage with the HSBC - we have been paying back "backbreaking" monthly payments every month since on a 10 year fixed period.

While friends with similar 'total' loans were paying as maximum £500 a month and minimum £18!!!! we were paying £1800!!!!

We really feel that we were poorly advised by the bank and it has crippled us ever since - we cant get out because of the ERC- but we took this mortgage at their advice completely!!

Would we have a case to ask for help/compensation if they have advised us badly (which they clearly have)....?

Thanks!!

How on earth is this mis-selling? Any choice you make about taking a fixed rate mortgage is your own choice. Neither the bank, nor you, have any idea what will happen to interest rates over the course of that time.

Your wife decided on that deal, so what on earth makes you think you should be compensated for buying something which - in hindsight - was not the best option?

Had the interest rates gone up (rather than down) and you found yourself paying under the marketrate, would you be happy for the bank to seek compensation from you?

It's utter nonsense, and if dunstonh is going to bite his tongue, I'm certainly not. This compensation culture is pathetic. You choose the deal, you accept the consequences. It's part of being a grownup. That you or your wife didn't have the foresight to think through all the consequences (both positive and negative) is your fault and nobody else's.

Compensation my a**e

jamesd

thebrowski started writing about compensation, but lets try not to discourage him from getting an alternative solution by being overly critical about just the compensation bit. There are surely other solutions available that will reduce the monthly payments (at the cost of paying for longer).

luckyfool

jamesd wrote: »

thebrowski started writing about compensation, but lets try not to discourage him from getting an alternative solution by being overly critical about just the compensation bit. There are surely other solutions available that will reduce the monthly payments (at the cost of paying for longer).

Sorry, the whole entire post was talking about, and asking advice with regards to getting compensation, not just the start.