Case for mortgage mis-selling?

halfordslane

Firstly this is my first post - so hello. Apologies if my question is covered elsewhere on the site. I have looked, but to no avail - hence my post. Hoping someone can help / point me in the right direction.

Basically, I'm investigating on behalf of my parents whether or not they have a case in mortgage mis-selling.

They had a mortgage (a percentage of which was a loan which was very near to being paid off) with Santander. However, they needed to borrow further funds. To do this they were coerced into re-mortgaging and bundling together their current debt (mortgage+£8k) even though this meant extending the life of the mortgage past retirement age without any question / advice (parents are now 59 & 62). When queries were raised about the future payments they were not fully answered. Also they were told that the original £8k loan would still be paid off at the original time as if they hadn't re mortgaged (even though they've now being paying back that money over a longer period).

Hopefully this makes sense. Just after advice as to whether or not they have a claim and if so what route should I take.

Many thanks for your time / reading.

Thrugelmir

halfordslane wrote: »

However, they needed to borrow further funds. To do this they were coerced into re-mortgaging and bundling together their current debt (mortgage+£8k) even though this meant extending the life of the mortgage past retirement age without any question / advice (parents are now 59 & 62).

Consolidating their unsecured debt into the mortgage would have reduced their outgoings. So why haven't they overpaid their mortgage since.

betmunch

Adding Unsecured debt to the mortgage does not make a mis-sale
Having term past retirement does not make a mis-sale

Lying to get a client to sign does mean a mis-sale.

From your post you cant say for sure whether it was a mis-sale or not, you need to get out your (their) paperwork and check what was done, when it was done, and why it was done.

With any luck you will have a letter of suitability in there which should explain things in english.

magpiecottage

betmunch wrote: »

Lying to get a client to sign does mean a mis-sale.

Yes but as you say, we do not know. We only have one side of the story AND it is second hand.

With any luck you will have a letter of suitability in there which should explain things in english.

Although the FSA handbook does not specifically require it. We also do not know when it was sold or the firm that recommended it.

betmunch

magpiecottage wrote: »

Yes but as you say, we do not know. We only have one side of the story AND it is second hand.




Although the FSA handbook does not specifically require it. We also do not know when it was sold or the firm that recommended it.

Um, thats why I said it.

Re: the suitability letter, thats why I said with any luck!

Cheers

holly_hobby

halfordslane wrote: »

Firstly this is my first post - so hello.

Welcome ..

We will all try to help as much as possible ... I've gone through your post, and have picked out areas and questions, that will be pertinent to any complaint review, with the lovely MagpieCottage :wave:raising anything I've missed out. (if its not pre-regulation or time barred)

halfordslane wrote: »

Basically, I'm investigating on behalf of my parents whether or not they have a case in mortgage mis-selling.

They had a mortgage (a percentage of which was a loan which was very near to being paid off) with Santander. However, they needed to borrow further funds. To do this they were coerced into re-mortgaging and bundling together their current debt (mortgage+£8k) even though this meant extending the life of the mortgage past retirement age without any question / advice (parents are now 59 & 62).

Why did taking a further advance mean the mortgage term HAD to be extended ? Was this because a shorter term (ie ending pre-retirement) was unaffordable to them ?

Coerced suggests they didn't want to take the action they did, so how were they persuaded otherwise ?

Who at the point of sale was the main earner ?

How long past retirement of each party does the mortgage end ?

What is their income in retirement ?

halfordslane wrote: »

When queries were raised about the future payments they were not fully answered.

Was this at the time of the mortgage appointment/sign up ?

Who arranged the remortgage (ie in house bank adviser or independent broker), & how did they end up sitting down with a mortgage adviser in the first place if they just wanted a personal loan ?

When was the remortgage effected ?

You say questions were asked but unanswered by the adviser, what questions ?

Why when they didn't recieve a satisfactory answer to the q/s (and also knew there may be affordability issues in retirment), did they simply continue regardless ?

Putting to one side any adviser faiings, how did they expect to pay the mge when they retire ?

halfordslane wrote: »

Also they were told that the original £8k loan would still be paid off at the original time as if they hadn't re mortgaged (even though they've now being paying back that money over a longer period).

Well that clearly isn't true, unless the adviser was using the C&I repayment schedule, whereby by year X , the mortgage debt would have reduced by Y. And that statement, even if proven, would not on its ownmake this a mis-sale.

However, IF affordability was not a priority issue, and your parents had sufficient income to be able to service the exisiting mge & a personal loan for the required finances, and were happy to pay a higher interest rate for a shorter term - they that MAY constitute a mis-sale BUT this is dependant on other areas and what the POS docs state.

If you can come back with a bit more info to the areas raised, we will try and give as much guidance as possible.

Hope this helps

Holly

halfordslane

Hi Holly/All. Sorry for delay in replying. Here are my answers. Looking forward to your response.

Welcome ..

We will all try to help as much as possible ... I've gone through your post, and have picked out areas and questions, that will be pertinent to any complaint review, with the lovely MagpieCottage raising anything I've missed out. (if its not pre-regulation or time barred)

Thank you - I will answer as many of the questions as I can.

Why did taking a further advance mean the mortgage term HAD to be extended ? Was this because a shorter term (ie ending pre-retirement) was unaffordable to them ?

This was the only way payments were affordable to them.

Coerced suggests they didn't want to take the action they did, so how were they persuaded otherwise ?

They were told that by bundling everything together it wouldn't affect the orginal loan of £8k plus they needed the money.

Who at the point of sale was the main earner ?

Mother

How long past retirement of each party does the mortgage end ?

Guessing here but I think around 6 years

What is their income in retirement ?

Pensions/lump sums upon retirement

When queries were raised about the future payments they were not fully answered.

Was this at the time of the mortgage appointment/sign up ?

Yes. They raised the point about this £8k loan and they were told that this and the interst would remain seperate to the mortgage. When it fact its been bolted onto the mortgage amount and therefore they've headed up paying interest for a lot longer than needed.

Who arranged the remortgage (ie in house bank adviser or independent broker), & how did they end up sitting down with a mortgage adviser in the first place if they just wanted a personal loan ?

In house bank adviser at Santander. Not sure how it came to them sitting down with a mortgage adviser - will find this out.

When was the remortgage effected ?

Excuse my ignorance but not quite sure what you mean by this?

You say questions were asked but unanswered by the adviser, what questions ?

Question relating to the existing £8k. See above.

Why when they didn't recieve a satisfactory answer to the q/s (and also knew there may be affordability issues in retirment), did they simply continue regardless ?

I'm unsure of this but I imagine it's because they needed the money - will find out.

Putting to one side any adviser faiings, how did they expect to pay the mge when they retire ?

By downsizing or with money from their pension.

holly_hobby

Hi there,

You have said your parents were happy for the mortgage to extend their retirement age by 6 yrs, because a shorter term was unaffordable. And planned when they reached retirement to downsize or service the mortgage with their pension - suggesting that consideration was given to this aspect of the arrangement at the point of sale.

If their remortgage was effected i.e started/entered into - over 3 yrs ago, any complaint (regardless whether jusitifed or not) is actually timebarred under the Limitation Act 1980.

If the sale was within the last 3 yrs, and bearing in mind their statement that a shorter term mortgage was unaffordable (especially when mortgage interest is typically less than that on short term borrowing i.e personal loan), then clearly there is no mis-sale.

It is also confirmed that they knew at POS that an affordable mortgage term would exceed their NRA, which they accepted and were complicient in, as you say because they wanted the loan - and this was the only affordable way to finance it. And that the questions raised, were to do with when the 8k would be repaid, not how they would finance the mge in retirement.

So - regarding the term into retirement - I don't believe (if not timebarred), there to be a jusitified complaint to be raised.

Regarding the 8k loan, and the alleged comments from the adviser that this aspect of the loan was to run along side, yet it turns out "it was bolted on" i.e the new mortgage advance included this.

Your parents at the point of sale, would have been provided with illustrations showing the debt, repayment type and schedule of payments.

They then completed a mortgage application form, requesting a mortgage amount, which from you post was for a combined total of their existing mortgage PLUS existing 8k loan PLUS a further advance on top (is that correct ?).

This would have been followed by an affordability assessment and mortgage offer (clearly showing the terms of the mortgage and total mge advance to be secured against the property, with the date of redemption). Furthermore, upon completion and after repayment of the existing mortgage, the solicitor would have either paid off the 8k loan directly (forwarding the excess funds to Mum & Dad, or simply repaid the mge and forwarded the remainder to Mum & Dad, for they to repay the 8k loan that had been incorporated into their mge borrowings. Either way, I do believe it would have been obvious to the applicants that the 8k clearly formed part and was now fully incorporated into the mortgage advance, and issued under the said terms.

So its very hard to see when considering the above, how they believed (especially at and post completion) how the incorporated 8k loan clearly forming part of the mge advance and under the same account number, somehow was being held/repaid separately to the mortgage (if the adviser did indeed say that - which is so fundamentally wrong its hard to believe was said in that context, although I accept this may be what your parents recollections may appear to suggest ), and that to their mind it would somehow be repaid earlier than the rest of the mortgage advance and terms it was advanced under.

Further to the above comments, and unless the reason why letter from the adviser supports their allegations re the adviser stating the incorporated 8k loan, was being "ran along" side the main ,and would be repaid at the same date as it would have been before conversion, and from my review of the basic and in some places a little confusing info provided, I really don't believe on balance the allegation can be substantiated or jusitified without such documentary evidence supporting the claim.

And therefore in my opinion a complaint re this matter and/or term into retirement (even if not timebarred which I believe it would be) does not hold any merit.

To bottom it out you may want to dig out your parents point of sale docs, inc their reason why letter (RWL), and come back if you find anything to support their allegation re the 8k loan issues.

Sorry if this isn't what you wanted to hear ... but hope this helps anyway !

Holly