Mis-sold mortgage?

droopy1

We found out last week that our NRAM mortgage, which was fixed for 15years, at near 9%, which we have stupidly stuck with for the last 8yrs, (hubby too scared to move due to front end loading), we find is now only a 50% mortgage. This means that at the end of 15yrs, we still owe 50%. We NEVER knew this. We have a depreciating life policy that will not meet this, that was sold to us at the same time, so this shows the two agreements were incorrectly matched. Our interest only payments on £163,000 are £1300 a month, we have struggled to pay. Hubby saw the yearly statements and never questioned the maths..but he has been struggling under the weight and stress of trying to pay. It was only when I put the life policy together with the mortgage and showed they didnt make financial sense. Why would anyone buy a 50% mortgage? Is this something NRAM have done since their problems? Anyone know anything about this? I have written to NR, but wonder if I am wasting my time!

ILW

What do you mean by a 50% mortgage?

If you are only paying interest, the capital owed will not decrease at all.

droopy1

That is the term they used when we asked, 50% mortgage, meaning there will be an outstanding debt of 50% at the end of term. So how does our mortgage ever get paid off? There is no endowment attached just the depreciating life policy they sold with the mortgage.

ILW

droopy1 wrote: »

That is the term they used when we asked, 50% mortgage, meaning there will be an outstanding debt of 50% at the end of term. So how does our mortgage ever get paid off? There is no endowment attached just the depreciating life policy they sold with the mortgage.

The £1300 per month will just be the interest at 9%.
A life policy will generally only pay off if someone dies.
Do you have any paperwork that explains the 50% bit?
If IO you will need to find a way of coming up with the capital.

kingstreet

You have a mortgage which is half interest-only and half capital & interest repayment?

Therefore half the mortgage is constant, with no repayment of capital and the other half is being paid back and the capital balance is reducing each year.

A decreasing term assurance was taken to provide life cover and this was set up at the outset to pay all the mortgage, but it isn't falling in-step because only half the mortgage is being paid back.

Is this summary correct?

Was this mortgage purchased via "advice and recommendation" by a broker? If it was, please look at the reasons why letter, or suitability report and tell us how this was considered to best suit the borrower's circumstances, in the broker's opinion.

You really need to set out the process by which this mortgage was arranged, so we can properly guide you.

Let_Us_See

I understand it is difficult, but what you are saying does not make sense.

Are you suggesting your mortgage was split 50% repayment and 50% interest only? If this is the case, then yes, at the end of the term you will still owe the lender 50% of the original mortgage as you have only been paying interest.

Alternatively, if you had a 50% Loan To Value scheme (you only borrowed 50% of the purchase price), then again the same interest only conditions apply? If you are only paying the £1,300 per month (9.57% interest rate) then this suggests that you only have an interest only mortgage.

Even more confusing if you have a DTA life policy? Advice you check you original mortgage offer and if necessary copy relevant section as a post.

Thrugelmir

droopy1 wrote: »

We NEVER knew this.

So you never read what you signed at the outset?

No grounds for a complaint years later.

holly_hobby

I agree with Kings. sounds like a part'n'part - with a DTA covering the C&I element, and looks like nothing covering the residual IO borrowings.

Just before we get into this, it must be said that your annual mge statements over the past 8 yrs, would have clearly discussed and illustrated that 50% of your original borrowings were interest only, with a non-reducing balance, and a clear health warning that a repayment or plans to redeem the os balance at the end of the mge term, should have been made by you.


Just out of interest, why was a 15 year term selected, as this possibly suggests (esp as its suspecgted part/part mge), that you weren't FTBs and at the point of sale (POS) already held an exisiting low cost endowment - which explains the IO element of borrowings, with 15 yrs remaining until maturity - hence the 15 yr term driven advice. If this wasn't or isn't the case, could you advise why this particular term was selected, just to give a bit more meat on the bones.

If the term was driven by max available term (were you mature buyers ?), and nothing to do with any exising provison, were you FTBs when you effected the mge

Moving away for that for the moment, it appears that you are suggesting that you had no idea any of your mge was on IO. This would be v odd for an adviser to do as there is no finanical gain, if authorised to give invesment advice, and if the adviser did not in any format, discuss the requirement of a repayment vehicle - if not for reasons of best advice, to at least generate extra commission for themselves as a result of an extra product sale.

I do think IO was discussed, to which if you don't recall the adviser, in any way, discussing how you would repay the IO element or trying to sell you a separate repayment vehicle .... (which I TBH don't think will be accurate), and IF he/she didn't recommend any type of repayment vehicle, this suggests to me, they were a basic mortgage adviser and apart from protection products, were not authorised to sell endowment/investment products.

OR they were authorised to sell investments, and DID in fact discuss the workings of an IO mge, and the requirement of a repayment plan/vehicle, but you declined their recommendation on costings/budetary constraints (which appears to be possible, given your comments that you are struggling with even basic IO mge repayments), and that due to the passage of time you simply now don't recall this aspect of the meeting - which is not a critisism at all, but entirely common place for lots of people.

This is where the point of sale docs (fact find and your suitability/recommendation/Reason Why Letter (RWL) ) will come into play and be examined by the Firm as part of any complaint ( in addition to ask you directly about the sale) - as the POS docs will have fully recorded the reason for the mge advice, what existing provision you had, why you chose the mge type you did, and what protection and repayment recommondations were made by the adviser - or if they were unable to make any investment recommendation, I would expect to see them refer you to seek an adviser whom could. Your suitability/RW letter would also give details of why you may have chosen not to pursue any of the advice given, and any future reqd review schedule put in place to address this.

Anhoo lot to digest, so as suggested dig out your point of sale docs, have a re-read through, and having done so, if you still feel that the adviser demonstrated negligence in neither discussing that any of your mge was on IO, nor how IO worked or the requirement of a repayment vehicle, come back to us for further comment - but you'll probably find the POS docs jog your memory.

Discussing how you will actually repay the IO element of your mge, will be a later topic.

Hope this helps

Holly

opinions4u

Did you take a 15 year fixed product at 9% but set the mortgage term for 25 years?