Mis-sold mortgage?

neetugopal

Hi all,

I took base rate tracker mortgage from Alliance & Leicester directly in July 2006. I am currently on their flexible base rate tracker mortgage. Mortgage adviser advised me that this would be the best deal for me as interest rate was 4.44% (BOE base rate minus 0.06) and it was 0.5% , if I can remember correctly, less than their fixed rate mortgage. She also mentioned that interest rates were not likely to go up and even if they go up it would only go 3-4 times (total 1% as bank tend to raise 0.25% at a time) in my 2 yrs locking period. So I opted for base rate tracker mortgage based on advise given.

Interest rates have risen 3 times already in 6 months and talks are going up to 6-6.5% until end of the year. Is there any way to persue bank to switch me onto their fixed rate mortgage as advise given was not correct? I agree that she was only guessing at that stage.

toonfish

hindsight is a wonderful tool. If anyone knew exactly what interest rates were going to do they would be sitting in a gold-leafed palace somewhere, not helping folk arrange a mortgage.

A&L will probably let you switch to a fixed rate, but you will have to pay the redemption penalty and probably new arrangment fee as well. If rates then fall again towards the end of the year as some are predicting you will be significantly worse off than if you stick with your current deal.

Nothing your adviser told you has been proven incorrect, so I can't see how you consider this a mis-sale?

dunstonh

You wanted a mortgage and you got a mortgage. Where is the mis-sale?

Middle of last year and many thought 3-4 interest rate rises would probably be about right. It was only the tail end of last year and January of this year in particular that it became clear that it may go a bit further. It is still possible that no more rises could occur.

If you had concerns about increasing payments then you should have asked for a fixed rate. You obviously didnt have concerns then. Of course, that would have cost you more and at this point it that option would probably still be a bit more expensive.

Crazy what people will try and claim for nowadays.

neetugopal

Thanks toonfish and dunstonh for your replies. It's probably better for me, financially, to stick with my current deal as exit charges are too hight and not worth switching.

MarkyMarkD

You will have had a "reason why" letter or similar explaining the logic behind you being advised to choose a tracker product rather than a fixed rate. This will probably say something like "you are aware that the interest rate on this product could increase, but were more concerned to have lower payments at the outset".