Has our mortgage been mis-sold

Jmk

8years ago my 65 year old,self employed husband and I took out an interest only mortgage for £150,000 valid until his 80th birthday.
Since then we have never defaulted on the payments,had various fixed interest deals without any problems. We have investments with which we intend to use to repay the capital sum as & when.

In January we started a new deal fixed rate for 5 years,at that time my husband asked if the mortgage was transportable to another property should we decide to move and was told it would be.

We have now decided to downsize and have requested to move our mortgage to the new property but have been told that because the new house is worth less we can't transfer the existing mortgage and must apply for a new deal which we have done.

My question therefore is, if the bank for whatever reason (possibly my husbands age) refuse to give us a new mortgage, which would be a much smaller amount with lower repayments, have we got a case for mis-selling the product in the first place?

If they do refuse and we withdraw the application we would continue to pay higher repayments on our current mortgage without defaulting, what is the problem?

We haven't had a decision yet because the application has had to go to a senior underwriter because my husband has passed his 71st birthday. Thank you

opinions4u

While the mortgage product is portable that has never been a guarantee of mortgage finance on a new property.

I assume that you're going to end up with a big ERC on this though. Could you not pay a partial ERC and port the lower amount required?

One other question. Why not cash in the investments and go mortgage free?

Jmk

Yes that's what we would like to do but we have to make a new application and it seems my husbands age is the stumbling block, although when we first applied for an interest only mortgage 8 years ago they were happy to lend up to his 80th birthday!!! we could continue on our current deal without a problem, higher repayments etc .

Realising our investments is not an option at this time.

Froggitt

Mis-sold or mis-bought?

kingstreet

Ability to port the rate is not connected to the lender's need to vet the applicants to ensure they meet current criteria.

A rate can be ported, as long as the applicant qualifies for a new mortgage at that time. Porting does not confer a right or guarantee that a new mortgage will be granted.

In addition, many lenders no longer offer interest-only on new mortgages and that may be another stumbling block. You need to establish what exactly you asked and the answer you were given at the time of choosing this new product. I suspect you were given information, not advice and the question you asked was correctly answered, but not in sufficient detail that it led you to misunderstand its meaning.

irishjohn

The lender has to safeguard the money they have loaned you and if the new property is worth less than your current loan it would be putting their money at risk to allow the current mortgage to be transferred to your lower value property.

As it is an interest only mortgage - partial capital repayment to bring it to a lower value is also not possible without administrative changes to the financial agreement you have with the lender.

When you renewed the deal in January and asked about transporting it to another property, did you ask specifically about transferring to a smaller lower value property? As it was just 3 months ago I am guessing that the idea of downsizing was on your mind? You may have to reconsider the idea of downsizing if you have placed yourself in a difficult position with respect to obtaining a mortgage - unless there is significant equity in the property to allow you to move and buy for cash.

Jmk

Ok i understand that our current mortgage loan to value is not acceptable on new property but the new loan they are asking us to apply for would be much less than the value of the new property ,less than half, and we would expect to pay admin charges.

The lender agreed a fixed rate interest only deal in jan 2013, what has changed since then? We are only looking for the same deal,reducing our mortgage by £51000.

kingstreet

With the information you've provided, we can only speculate as to the reasoning;-

- age
- interest-only
- loan to value.

The only way you are going to get a complete answer is to ask the lender, or take the documentation to a broker to see what he/she thinks.

Thrugelmir

Jmk wrote: »

The lender agreed a fixed rate interest only deal in jan 2013, what has changed since then?

Who is your lender currently?

irishjohn

Jmk wrote: »

Ok i understand that our current mortgage loan to value is not acceptable on new property but the new loan they are asking us to apply for would be much less than the value of the new property ,less than half, and we would expect to pay admin charges.

The lender agreed a fixed rate interest only deal in jan 2013, what has changed since then? We are only looking for the same deal,reducing our mortgage by £51000.

As far as I understand it - when you borrowed in January at a specific rate - your lender will have loaned it on the basis of the financial situation at that time. But now it is nearly May and the lender is going to have to make a new loan to you based on the current financial situation. They cannot just take the money you settle the January loan with and lend some of it back to you at the January rate. But its the age of your husband which is now the problem. You need to find a lender who will lend for less than 10 years to someone over 70 and that may not be your current lender.

Its just a shame that the downsizing decision was not taken to coincide with the deals available in January when your husband's circumstances were suitable. Are you younger than your husband? Can you apply for a mortgage?

Jmk

Yes John your right bad decision timing,
Our financial situation hasn't changed in fact it will be much better if we can get the new mortgaged approved !!!!!