Is there any point in investigating this....

Kittyrow

Six years ago at the age of 25, my husband went to an independent financial advisor in our local town. He went for advice on financing a mortgage. He is a teacher, and in 2006 earned £20 828. He lived at his parents’ home with no financial commitments. His car was bought from savings, and held a first class credit score. It wasn’t a joint application for fear of my missed payments clouding the opportunity to get the best possible deal. He had some savings, and so did I. The purchase price of our desired property was £83000. A bargain, as it was advertised at £95K. Being first time buyer(s) we trusted the judgment of the IFA. He sourced the market and drew up a summary of products available. The list was endless.

Six years on with no missed or late payments, and a wage increase of £15 000, and two children we obviously wish to move up the ladder and find a bigger property. Luck has it that we have the chance to buy a property from a family member at another bargain price; A much bigger house with far more potential than our small terraced house.

The IFA sourced the market and has documented his findings in a record of suitability. He has also stipulated two facts that were not true at the time of the mortgage application. He recorded that my Husbands wage was not likely to increase. This was not true as the teaching pay scale rises on yearly increments of £1000. The IFA knew he was a teacher, not only by wage slips but by turning up at his school with documents for him to sign and collecting cheques.( Documents that I may add would in hindsight have required greater detail in reading) We made the pay scale clear to the IFA. The information we have looked back through also shows that the IFA had two options. 1.-To recommend a particular product or to provide a list of suitable and leave it up to us. There is a box ticked that says he recommends this one product.

The end result was a Northern Rock Together Mortgage. £73 700 secured, and £8 300 unsecured over 35 years, fixed for two. Fixed term ended May 2008. We have had no issues with the affordability and have made all payments on time with no financial hardship. With things going along so well, we haven’t really needed to dig out the mortgage documents until the chance to buy the new property presented itself. Oh dear! On doing so, we found out that Nram no longer write no new business and that we have paid back over £37 000 but our mortgage balance has reduced by only £2,100. The unsecured element was originally £8,300 and it stands at £7,911 having only reduced that by a few hundred pounds too. We don’t want to borrow more money from Nram (which is a good job since there isn’t an option) we want to port our existing deal on to the new property that is £60K and reduce the term to 20 years. The porting application is with the underwriter at the moment.

In the meantime, with the discrepancies found and that we were misguided six years ago do we have grounds to complain? The savings we had would not have covered a 5% deposit, which would have been £4,500. My husband had the option to use a credit card on a 0% balance that we could have used to fund the short fall. Yes, a credit card would be a dangerous game in securing a deposit… but surely adding an unsecured loan of £8 300 to the mortgage terms of 35 years is irresponsible advice/lending.We were not shown the illustration of repayment on this element. Since uncovering the horrible reality of our situation, we have also found out that should we re mortgage, Nram add 8% to the SVR at the time. Currently we would pay almost 13%. Also that it is not covered by the FSA. We would then be left to find a 10% deposit, and loose what we’ve already paid and be in negative equity.

We have everything crossed that our porting application is successful. Our home has been valued at £85k, but realistically I imagine it selling around the £78-£80K mark.

I don’t want this to come across like another case of sour grapes with the IFA, because we have had six happy years with no problems repaying. Our issues come with the discrepancies and how fast he moved by turning up at the school with documents to sign etc… Would there be any point in complaining, and where would it actually get us.

Thanks

wealdroam

This should be on the Mortgage board.

You do understand don't you that during the first few years of a mortgage most of the money you pay goes to paying off the interest of the loan? The capital is not reduced by much during the early years.

There are a number of MSE guides about mortgages which might explain things further.

"we haven’t really needed to dig out the mortgage documents".
do you mean "we haven't bothered to read the statements the mortgage company have sent us every year"?
A glance at those would've shown whether things were progressing to your satisfaction or not.

Kittyrow

I have posted on the mortgage board. Thought that it may be a consumer rights issue as well.

When I said that we had no need to dig out the mortgage documents, I referred to the offer of,key facts, and product suitability. We are fully aware that the majority of early payments are mainly interest. My point was that we were not fairly advised.

wealdroam

Kittyrow wrote: »

I have posted on the mortgage board. Thought that it may be a consumer rights issue as well.

When I said that we had no need to dig out the mortgage documents, I referred to the offer of,key facts, and product suitability. We are fully aware that the majority of early payments are mainly interest. My point was that we were not fairly advised.

So have you not been tracking progress through your annual statements?

Oh dear.

Posting in two places is not a good idea.

Firstly, it is against the forum rules.

Secondly, a potential responder may spend some time on a reply which turns out to have already been written elsewhere.
A waste of time.

You seem to have started several threads on three boards which are basically all about the same issue.

redpete

It's difficult to see through the mass of unnecessary detail what it is that you are complaining about.

- The IFA not including the guaranteed pay rises - did this make any difference to the deal you got?

- Nram no longer offering mortgages - hardly something the IFA could have forseen 67 years ago.

- Not paying much off in the first 6 years - your annual statements would tell you exactly how much you had paid off each year, is this really a surprise now?

- Using a long-duration loan for a deposit - why didn't you mention you had other ways of getting together a desit when you took the seal out?

- The cost of ending the mortgage early - would have been in the documentation you got at the time.

- The IFA acting quickly to complete the deal - would you have been happier if he took longer? You could still have taken time to properly read the conditions.

We would then be left to find a 10% deposit, and loose what we’ve already paid and be in negative equity.

I don't see where you lose what you have already paid - it's just that most of it has been taken up in interest payments, like all mortgages in the early stages.

Judith_W

Did you not have another look at your mortgage at the end of the 2 year fixed period?

Did you make it clear to the IFA about the guaranteed pay increases or did you assume they would just know? It may be obvious he is a teacher/works at a school but to expect an IFA to have this knowledge is a bit extreme.

Did you state you had other means to pay the deposit, otherwise how was the IFA to know?

Gladys_Friday

Let's hope the husband isn't a maths teacher!

Anne3333

Kittyrow wrote: »

When I said that we had no need to dig out the mortgage documents, I referred to the offer of,key facts, and product suitability. We are fully aware that the majority of early payments are mainly interest. My point was that we were not fairly advised.

Despite receiving the offer, the key facts and the suitability letter, you took six years to check them properly???

Besides the IFA, you would also have received a copy of the offer from the mortgage lender, did you not read that either?

And now, six years later, you state you were not fairly advised????

You have responsibility when you sign any official documents and contracts, to ensure that you fully understand what you are undertaking. You should never be afraid to make people wait whilst you fully read and understand them. And you should never sign until you are happy with the conditions.

McKneff

gladys_friday wrote: »

let's hope the husband isn't a maths teacher!

:t:t:t....................................

mountainofdebt

The mortgage deal available to you at the time might have been determined that at the time only your husband's salary was being taken into consideration - could he have got an over 4x his salary elsewhere ?

Regardless of the 'bargain' that the new house is, you won't be able to get away from the fact that you will have to find approx £3K to cover the shortfall of your existing mortgage and and charges whilst having no deposit for the mortgage on the new one - which I have no doubt will be at a rate which is higher because of the loan-to-value ratio ......or were you seriously thinking of moving a £83K mortgage to a £60K house?

This would only be advantageous if the new property was worth more than £83K but why would a relative give you (effectively) £20K ....and may land them in hot water for deprivation of assets if they tried to claim any benefits etc

DVardysShadow

Kittyrow wrote: »

I have posted on the mortgage board. Thought that it may be a consumer rights issue as well.

You are cross posting. 2 identical posts within 2 minutes of each other on different forums.

This is bad form. Your post is long and involved and will take some effort to answer. So now you risk someone answering on one thread when a perfectly satisfactory answer is available on another thread. It is a waste of the efforts of the second poster.

If you must crosspost, then say that this is what you have done in both posts. And ideally choose just one forum to try, only posting to another forum if you don't get a good response in 24 hours. And again, if you do this, say what you have done in the new opening post and go back to your old opening post and edit that to add the fact that you have reposted.