PLEASE Help Rid Us Of Our Little Ball & Chain!

Sace

Hi all.

I'm looking for your thoughts on a rather sticky mess my husband and I are now in following some rather dodgy (in my opinion) advice our IFA gave us a year ago.

My husband and I have a 100% interest only mortgage - it was all we could get at the time to launch onto the property ladder and was certainly not our preferred choice. We have had the mortgage now for 2.5 years.

Last year we wanted to get rid of our personal debts and inspired by Martin Lewis' :money: lunchtime shows, we eagerly set off to our local IFA. I had it in mind to work hard at paying off the debt as quickly as possible (even if it did mean cutting Sky TV off for a while!!) however our IFA found us a secured loan over 25 years at rock bottom repayments and suggested the money we were saving was put into a savings account. At the time it seemed sensible and that was what we did.

Due to changes in personal circumstances last year, my husband and I had to use up what little we had saved just 6 months after starting, so now we have nothing in the savings account.

We have since tried to change our mortgage to a repayment mortgage and came across a nasty little road block in the form of a deed of postponement. I now understand this means the secured loan has been added on top of our first mortgage, therefore we have negative equity on the house as it’s not worth what we owe. I swear this process was not explained to us by the IFA and what would ever happen if we wanted to move house/re-mortgage – had it been explained, we would have ran a mile, became credit card tarts and eaten beans for a while.

As I see it, before we can look to move house or re-mortgage we have two rather bad options:

1. We have to wait another 24 years to pay off the loan (meaning we will never own the house on our current interest only mortgage)

2. We wait until our house price rises to cover the mortgage and loan amount (erm, don't think that will happen)

We are prisoners to this loan Company and I am so damn mad about that.

My question is this – if we get two personal unsecured loans to pay off the one secured loan – this in theory will get the secured loan Company out the picture, allowing us to move house/re-mortgage.

Both my husband and I have ‘excellent’ credit ratings according to Equifax and we have never had any issues in meeting monthly payments. We just have this ball and chain tied to us at the moment and need so desperately to get rid of it.

Your thoughts/advice/guidance on what to do next is very much appreciated.

Sace

Little_Miss_Winner

Hi and welcome to mse, you have come to the right place, and hopefully our *experts* will be along very soon.

Just a couple of questions...

however our IFA found us a secured loan over 25 years at rock bottom repayments and suggested the money we were saving was put into a savings account.

Although the payments would have been rock bottom, how much was the total amount repayable, or the apr?

I now understand this means the secured loan has been added on top of our first mortgage, therefore we have negative equity on the house as it’s not worth what we owe. I swear this process was not explained to us by the IFA

Did the FA, work for the mortagage company?

Sace

Thanks for this - it's good to know there's support out there!

The APR is 8.9%

As far as I'm aware, the FA is completely independant and so nothing to do with the mortgage company. I do know for sure however the same IFA has also caused issues for my brother and parents with the financial advice given. We aren't impressed!!

Little_Miss_Winner

Hi,

Am a little confused re the "deed of postponement"? As i understand this has been issued to you by your mortgage provider, when you had taken out the mortgage?

our IFA found us a secured loan over 25 years at rock bottom repayments

How much was the secured loan for?
How much do you pay back monthly.

Little_Miss_Winner

Also Sace, you may get more replies if you copied your original post over to the Morgages forum too.

Sace

Hi again!

This is where it gets confusing - I do not recall sending the deed of postponement to the loan Company during set-up and I certainly don't have this in the paperwork from them. I assume this document is something we have to send them, they couldn't have just ordered the mortgage Company to hand it over?

The secured loan was for £35,000 (ouch, it hurt's to say it) plus a staggering £17,500 arrangement fee. Our monthly payments are £296.14.

Hang on, just had a thought... If we try to settle this loan we're also going to be charged for the £17,500 arrangement fee, plus six months interest, plus anything else they decide to stick on top. We'll never get personal loans for that amount. Now I'm really miserable

mjdh1957

I'd suggest going along to the Citizens' Advice and asking about making a complaint to the Financial Services Ombudsman about your IFA. It sounds as though he wasn't giving you good advice and making you agree to things that weren't in your best interest.

Rafter

Sounds like extremely dodgy advice in return for a huge fat commission on the loan that your IFA would have taken.

Not sure what compensation you might get or from who though.

Huge unsecured loans may not be the answer, as they too will restrict the amount you can borrow.

I suggest you find another IFA and see what they advise. Before signing on the dotted line, post back here just to double check what you are being advised.

R.

iolanthe07

Surely an arrangement fee of £17K on a £35K loan can't be legal?