Two mortgages sold - Worth asking for compensation?

lotjonen

I wonder if anyone else has had a similar problem to mine?
We bought a house in 2000 and had a fixed rate mortgage with Nationwide. We renewed our fixed rate with them in 2005. Then, sold the house in 2006 and bought a bigger one and instead of changing our existing mortgage, Nationwide sold us another similar mortgage because the five-year fixed period hadn't finished.
This left us with two fixed rate mortgages, and when the interest rates plummeted, we were left with two possible exit fees (thousands!) instead of one - so the existing deals weren't worth terminating for a better deal elsewhere!
Would there be grounds for complaining? I'm not sure if we even realised at the time that they opened another mortgage for us! They never explained to us that if we were to leave them we would need to pay two redemption fees - and I'm still wondering if it was ethical to sell us another mortgage for the same house instead of increasing the existing deal...It doesn't make any sense now as they got our money anyway whether it was one or two deals, it just trapped us to stay with them!:mad:
Anyone who's even heard of such thing? Our deals are finishing in 5 and 9 months (finally!) but still annoys me to think how this happened and why not to exempt us from the exit fee or let us pay it and just increase the existing deal.

GMS

If interest rates had risen sharply would you pay compensation to the lender?

lotjonen

GMS wrote: »

If interest rates had risen sharply would you pay compensation to the lender?

That wasn't the point - of course there's always a risk, lending is a business after all. I understand that and over the years I have paid more when rates have gone down. However, the question is the second mortgage we were missold.

somethingcorporate

Why do you think it was a mis-sale? it is perfectly acceptable to have multiple mortgages on a single property (assuming the first charge holder gives permission). Each could be with separate lenders with different rates and terms (including ERCs).

The alternative would be you paid the ERC on the first when you remortgaged and then just had to pay a bigger one on the combined if you wanted to leave when the rates dropped so I do not see how it has cost you any more.

opinions4u

Your mortgage had two products. Both had their own ERCs. This is quite normal when porting.

The ERCs would have been clearly laid out in your key facts document.

The ERCs will be linked to the amount of the individual product. So two smaller amounts adding up to the total ERC due.

If you'd not ported you'd have had an ERC to pay on the old mortgage. And then you'd have taken out a new mortgage with one product and one ERC. But that new ERC would have been bigger.

Unless you can coherently explain what should have been done differently I can't see grounds for complaint.

and I'm still wondering if it was ethical to sell us another mortgage for the same house instead of increasing the existing deal

If they'd been able to increase the existing deal, they'd have increased the ERC at the same time. So you'd be in much the same position now.

holly_hobby

No, it was a top up mge to the 1st.

The alternative would have been not to port the existing fixed rate you held, and paid the associated early redemption penalites at that time, effecting the 2nd product you took over the entire borrowings, instead of the increased borrowings element.

As a point to note, a mortgagor has to request the lenders permission to port the exisiting mge product.

The only way you would have been "mis-sold", would possibly be if you were not aware that you did not have to port your exisiting mge product to your new mortgage borrowings - thereby you were prevented from making a balanced decision as to whether porting your existing rate would have been beneficial for you.

I assume that the interest rate on the 2nd mge product effected, is higher than the ported product, which was behind the decision to port (combined with avoiding ERPs).

On that basis, there is no mis-sale of a mortgage product here.

Hope this helps

Holly

Thrugelmir

lotjonen wrote: »

Anyone who's even heard of such thing?

Many people regret decisions with hindsight. The Nationwide have done nothing improper. You were given options and made an application based on that. The Nationwide didn't merely open an account.

lotjonen

holly_hobby wrote: »

No, it was a top up mge to the 1st.

The alternative would have been not to port the existing fixed rate you held, and paid the associated early redemption penalites at that time, effecting the 2nd product you took over the entire borrowings, instead of the increased borrowings element.

As a point to note, a mortgagor has to request the lenders permission to port the exisiting mge product.

The only way you would have been "mis-sold", would possibly be if you were not aware that you did not have to port your exisiting mge product to your new mortgage borrowings - thereby you were prevented from making a balanced decision as to whether porting your existing rate would have been beneficial for you.

I assume that the interest rate on the 2nd mge product effected, is higher than the ported product, which was behind the decision to port (combined with avoiding ERPs).

On that basis, there is no mis-sale of a mortgage product here.

Hope this helps

Holly

Thank you for this reply.:) The rate on the 2nd mortgage wasn't any higher - the deals were very similar, but at the time we didn't realise there would have been an option to have only one deal.

opinions4u

lotjonen wrote: »

Thank you for this reply.:) The rate on the 2nd mortgage wasn't any higher - the deals were very similar, but at the time we didn't realise there would have been an option to have only one deal.

There probably wasn't the option of porting the existing product and increasing its balance for the new property.

You would have been able to have a new product covering the whole mortgage on the new property. But that would have meant paying the ERC on the old property.

dunstonh

Nationwide sold us another similar mortgage because the five-year fixed period hadn't finished.

That is what normally happens.

This left us with two fixed rate mortgages, and when the interest rates plummeted, we were left with two possible exit fees (thousands!) instead of one

Again quite normal and as exit fees are usually percentage based, you are no worse off. Indeed, you would have been worse off on exit fees had you paid the ERC on the first mortgage deal to get out of it.

Would there be grounds for complaining?

I went the petrol station today and filled up my car. It cost £50. I paid £50. Do I have grounds for complaint? That is effectively what you are asking.

No you dont.

and I'm still wondering if it was ethical to sell us another mortgage for the same house instead of increasing the existing deal...It doesn't make any sense now as they got our money anyway whether it was one or two deals, it just trapped us to stay with them!

Of course it was ethical. Indeed, it would have been unethical potentially to charge you to move onto a single rate. They didnt trap you. You trapped yourself.

kingstreet

So, the original fix was five years from 2005 and another was five years from 2006?

How are they only ending in five months and nine months' time respectively? They should have been over nearly two years ago?