secured loan bad advice need help

wench_2

Almost 2 years ago we were advised by a company called "Mortgage Matters" to take out a stop gap loan until the redemption fee on the mortgage expired (approx 12mths cost to get out early 4 thousand) So we could remortgage as our fixed rate was due to expire and we were looking for a lower rate.

So we took out 20 thousand over 30 years (we paid back credit cards and spent it on the house) on the understanding that when "MM" found us a new mortgage they would add this loan into it and with the lower rate we would be paying about the same amount as before the rate sky rocketed.

Only with the economy taking a nose dive everything went belly up and after getting the loan (from first plus) "MM" sent us a letter saying unfortunetly they can not deal with us at this time and they were taking us off their books!!!

So now we are stuck paying a loan @£185 a month plus the mortgage which luckily still has a low base rate.

I have spoken to people who say we could make a complaint of bad advice but i dont know who to or even if we have a case or was it just plain stupidity and its tough.

We are just managing to pay everything at the moment but if the base rate ever changes we will be in serious trouble so i need to look into it now so i'm not think what if..... a couple of years down the line.

Any advice would be really helpful thanks suzanne x:(

Jeff_Bridges_hair

Do you have anything in writing saying they would guarantee you a new mortgage? Did you see an independent financial advisor before you followed their advice?
How did they approach you or did you approach them ?

CLAPTON

why can't you remortgage with a conventional lender?
what's the APR of the 20k loan?

Consumerist

CLAPTON wrote: »

what's the APR of the 20k loan?

By my calculation, £20K over 30 yrs @ £185pm means around 11.2% APR.

If you have sufficient equity, one option you might want to consider is to ask First Plus if they would add 20K to your mortgage.

wench_2

Thanks for your replies i really am driving blind when is comes to stuff like this .........ok they approached us (phone call i think) just as we were starting to look for new rates and it was probably lazy on our part but we stuck with them after looking into their company and initially they brought us lots of mortgages with different rates and benefits/conditions to see which was best for us then when they looked into our mortgage and saw we had an early redemption penalty thats when they advised the loan and to wait. They then came back with alternative rates including the 20 grand to see if we could still afford it when we remortgaged. (which we could as it was supposed to be for 12 months)

They sent a mortgage advisor out and no when i had a clear out last year i threw out all the paper work except the loan agreement which was witnessed by the advisor on behalf of "MM" and with their address.

As for remortgaging we have tried but the mortgage and the loan is more than what the house is valued at now due to the economy. We bought for 113 and got a mortgage for 96 a house accross the road was bought in the same year for 150

Consumerist.......Have i answered your question? if not how do i go about asking first plus, my mortgage is with Gmac so is that possible?

Consumerist

Sorry, I misread your post. I thought your mortgage was with First Direct but I see that it was they who provided the £20K loan and you have already approached your mortgage lender, which is what I had meant to suggest.

wench_2

No i haven't as i didn't realise i could do that, However i would be looking to change mortgage companies when the base rate goes up because we could never afford both the loan and the mortgage (in 2006 when our fixed rate ran out we went from paying approx 400 to nearly 700) so would they let us do this, tho hopefully the house prices would have gone up to.

Consumerist

wench wrote: »

As for remortgaging we have tried but the mortgage and the loan is more than what the house is valued at now due to the economy. We bought for 113 and got a mortgage for 96 a house accross the road was bought in the same year for 150

Much depends on the current value of your house. If "the mortgage and the loan is more than what the house is valued at now", as you mentioned earlier, then you may have difficulties even with your current mortgage lender to add the full £20K to the mortgage. However, it has to be worth a try to get as much as possible onto the mortgage if your mortgage rate is lower than the rate on the £20K loan.

Regrettably, many people are going to be in a similar situation as mortgage rates rise and low capped rates come to an end. You are wise to start planning now for when it comes.

paddyrg

It is well worth sorting this ASAP as the market (which has been quiet) is building upto another dip according to some commentators. Lower prices have discouraged lifestyle sellers, but the three D's (death, divorce and debt) will keep a steady supply of properties even when there is no lifestyle trading - which will depress prices more. Alas you're so overstretched that adding £20k to the mortgage may just not be possible. Have you started thinking about what plan B would be? Nobody (especially the bank!) wants to see you forced to sell, but if things are getting too tight for you, you may want to have a graceful response in mind, and avoid a panic or forced sale. Could you sell any other assets to clear this extra £20k? Or take a lodger? Or even an extra job? Having a reasonable plan will help you if things tighten. If you're really anxious about it, talk to a financial advisor who can help you churn the figures and may be able to help.