Halifax Home Insurance Added To Mortgage

Readysound

I took out a Halifax mortgage in 2007. The advisor explained that a requirement was to take out Home Insurance and would I like to take it out with Halifax. I decided to go with it for ease, and thought it would be convenient having both products with the same provider.

Admittedly, I took my eye off the ball with it being rolled up in one monthly payment to Halifax. After 5 years, I decided to review my Home Insurance to find I was paying well over the odds for what was poor cover (average around £480 per year - the figure would also rise yearly despite my "no claims" and "loyalty" bonuses!)... so, I cancelled 2 months ago, and got MUCH better cover for £160.

I expected my monthly Halifax payment to reduce accordingly, but noticed that the same amount was being debited from my account for 2 months. On ringing them, I found that the Halifax was spreading the cost of the yearly Home Insurance over the whole term of the Mortgage (originally 25 years).

This to me represents an absolute scam. I wasn't informed by my advisor that the Home Insurance would be added to my Mortgage term! I thought with it being a monthly payment, it would spread over the year of the cover. So the total repayable for the 5 years cover will probably work out at £6,000+ by the end of my mortgage term - who would opt for that!

I'm going to dig out my documents and get legal advice. I feel like I was mis-sold this product based on these terms. Surely spreading Home Insurance over the term of the mortgage should be something a customer requests or opts into, or is at least informed of by the Mortgage Advisor who sold it, not a default arrangement.

Any advice or knowledge on this would be greatly appreciated.

holly_hobby

Each yr from inception and on renewal, you would have recd your new policy terms & conditions, including what that yrs annual premium was to be.

The fact that the monthly premium rises each yr, despite the application of any loyalty or NCD bonus - is irrelevant in this matter.

What is relevant is that the only compulsory insurance that is reqd in connection with a mortgage, is buildings insurance - which may be sourced with any suitable provider - not just the lender themselves (although I note that you say you went with the lender for ease).

Your illustrations should have also clearly shown the mortgage payment and the payment for the insurance as 2 seperate figures - not as one combined one - this is mis-leading to the consumer.

You need to dig out what POS docs you have, IDD, Fact Find, Illustrations, Reason Why Letter to see what exactly was discussed at the time - as our memories do fail us sometimes.

Have a scout through what you have and come back if necessary.

Hope this helps

Holly

Readysound

Thanks Holly, I will be digging out my documents.

I'm sure that the initial illustration would have shown the mortgage and insurance payments as separate. Also, the yearly renewal forms I received showed only the cost of the Insurance premium for the year, which is fine and expected. However, what was never made clear to me was that each years insurance premium was to be spread over the same term as my mortgage, and my monthly payment recalculated. As Insurance is a separate product that serves 12 months, I would expect to pay 12 monthly payments, not spread it out over twenty odd years thus paying massive interest on it. When I phoned Halifax, they informed me that my monthly payment won't be going down, despite cancelling my Insurance, because it was spread across / built in to the mortgage term.

I'd be interested to know if this is standard practice, to wrap other products into Mortgage products like this?

It seems I'm not the only one stung by this. Search Google for : Halifax-home-insurance-linked-to-mortgage-rip-off - it's the first link (penaltychargesforum)