Missold Mortgage?

domthered

Ok, bit of a story here, as always

An aquaintance who was a mortgage broker approached me and offered an investment whereby I could build a house. He owned the land with 5 plots with planning and sold me one along with 4 other investors one of which was the project manager. He arranged a self build mortgage for me, and explained the costs would be aprox £220k, end value £300k. The maximum mortgage i was able to get with my and wifes income was £170k. At first I only wanted to do it in my name but he badgered me to get my wife on as it would boost the amount borroweed; she was on maternity at the time and although had not intention of returning to work was asked to sign a letter saying she intended to do so as 'this would help the application'. I queried the cost but the broker said he'd sort out any additionak borrowings later...of course as soon as the mortgage went through he has sold his last plot for £80k....I 've now racked up £80k on unsecured borrowings to fund the build...the other issue is the 'broker' completely messed up the costings for groundworks and the total costs has been £290k! I think he's missold the mortgage - it wasn't suitable for my needs (i needed £220k to build - he knew that!) and misrepresented and was negligent in the costings of the build.....what do others think....to put the icing on the cake the house is worth £250k, but I'm not complaining about that, that's the market, it's the fact i was never going to be able to afford the build, and he had a conflict of interest in doing the mortgage and sellng me the land....

opinions4u

It's a commercial deal so if you are to pursue anything you will need to go through the courts. Probably not a good idea if you've been party to misleading the lender about your wife's income potential as you are guilty of mortgage fraud.

From where I sit, you got involved in a duff investment and it's gone wrong - end of story.

domthered

i've already got my solicitor on the case in terms of the business deal and his poor costings etc, but i was more looking at the angle that he advised me on a mortgage that was clearly not sufficient for my needs therefore possible complaint and then ombusdsman route....shouldn't he have said well sorry the max mortgage you can get based on your income s £170k, £50k short of what's needed to build, so stop. He of course had a clear incentive to get the mortgage through as he owned the plot i was buying!

Thrugelmir

opinions4u wrote: »

It's a commercial deal so if you are to pursue anything you will need to go through the courts. Probably not a good idea if you've been party to misleading the lender about your wife's income potential as you are guilty of mortgage fraud.

From where I sit, you got involved in a duff investment and it's gone wrong - end of story.

Agree totally. You would need to prove that you undertook due diligence yourself. As a mortgage broker certainly wouldn't be competent enough to cost a building project. If the estimated build costs were £220k and you could only finance £170k. Then how did you expect to finance the shortfall yourself.

somethingcorporate

Didn't the alarm bells ring at any point?

- When you didn't have the earnings to support the mortgage?
- When you had your wife sign a form lying about her returning to work?

I agree with O4U, this is a situation of your own making and have been blinded by the potential $$ profit and been suckered in.

Trollfever

A failed business venture.
Cut your losses.

dunstonh

I think he's missold the mortgage - it wasn't suitable for my needs (i needed £220k to build - he knew that!) and misrepresented and was negligent in the costings of the build.....what do others think

Its a commercial venture as already mentioned above. So, the protection of the FOS doesnt apply.

Basically, when entering into a commercial relationship you make a commercial decisions with a businessman head. This means thinking like a business man and seeking consultation with solicitors, accountants, business advisers and IFAs with regards to the legal, tax and advice side of things. You are not entering into a personal relationship. Its commercial.

So, with respect to the commercial side, who did you employ to provide the necessary legal advice you needed?

domthered

well, about the time the unsecured debt i used to complete the build became a problem!

i agree i've been a clot but i trusted the guy and didn't challenge anything, and assumed he's sort out the shortfall in cash to complete the build, and most certainly kept thinking of the $$$.

I do think he was negligent in his costings as he had done this before with other small developments.

I should have questioned the £170k mortgage more, but again, just assumed it was all ok as he was handling the development along with the 4 other investors.

He has given mortgage advice though, and setting aside his involvement with the development, he has a requirement to ensure it is affordable. And what's important is not whether i should have checked myself, what a plonker etc, it's what he is reuired to do under mortgage regulation.....

Thrugelmir

domthered wrote: »

He of course had a clear incentive to get the mortgage through as he owned the plot i was buying!

Though you had a say in what was built. As you said the project was self build. So assume you had some personal involvement in the process.

£210k for constructing a new build is a lot of money.

Assume also you agreed on the internal specfications during the fit out. As this is where money can be saved or spent.

Is it the case that you thought the project would be highly profitable and worth the risk?

Burridge60

This classifies you as a Developer and as such engaged on a commercial enterprise. Did your solicitor raise any qualms with you as you went through the buying in and legal process.

There are surely lots of enquiries that were made to reassure you and make the risk of the borrowing against your home worthwhile?

If your wife was not intending to return to work why would you sign a letter suggesting that she would?

When you get to court I trust this will be admitted under oath!

dunstonh

He has given mortgage advice though, and setting aside his involvement with the development, he has a requirement to ensure it is affordable. And what's important is not whether i should have checked myself, what a plonker etc, it's what he is reuired to do under mortgage regulation.....

You are looking at this with a consumer hat on but you are not a consumer. You are a business person dealing with a business proposition in the commercial world. You dont get consumer protection.