Were we mis sold mortgage?

Moneyidiot

Hi. Myself and DH sought advice from financial advisor about mortgage for a new-build, explaining we knew very little about finance and the jargon. We were happy with the mortgage that we got offered and started the build. Advisor told us we had 6 mths before first stage payment needed to be drawn down. About 14 weeks into build the solicitor phoned asking were we almost ready to draw down first stage payment as it had to be completed in s fortnight. We were shocked and eplained that we understood we had 6 mths. We complained to advisor who read through our offer and said he hadn't realised we only had 16 weeks, not 6mths. We were livid but he spoke to mortgage company who said they could offer extension period. They came back and offered us 10K less than original mortgage offer. We explained to advisor we needed more and that quote had been agreed with building contractor before build started. Advisor spoke to mortgage lender and they offered us 6k more based on assessment of our finances (or so we thought). We agreed to the new amount and building continued and first payment was drawn down. We since paid 3 payments on the new mortgage. These were £100 a month higher than expected. I called mortgage lender and discovered that the amounts were correct because our interest rate had gone up, therefore mthly payment went up. Also, our new build was down valued by £15000. We hadn't been informed of this and the new mortgage terms had not been sent on to us or seen by us. We were shocked. £1200 extra per year for the next 25 years that we weren't aware of or willingly agreed to!!! Advisor told us that he should have realised that the interest rate went up as mortgage went from 75% loan to value to a 80% loan to value mortgage and that's why our monthly payments went up. Also our repayment amount had gone up by £10000 without him realising too. I feel that our financial advisor has let us down out of negligence and I'm really distraught as the money we will be out could have been put into savings for our two young boys. Do we have any comeback here? Should advisor not have informed us of the new terms and sent them on to us so we read them before agreeing anything? Or should we not have Been asked to sign new offer by mortgage company. Do we have any comeback?

Thrugelmir

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kingstreet

Write to the advisor firm, heading your letter "complaint" setting out what went wrong and what you would like to happen to resolve it.

The firm has 8 weeks to investigate and issue a final response letter. Once you have that, if you are unhappy with the solution, you have the right to escalate the complaint to the Financial Ombudsman Service (FOS). A FOS decision is binding on the regulated firm, but not on you.

I guess this is Virgin Money with its 16 week offer period and extention process which sees you re-scored with a possible reduction in the amount offered if your circumstances have changed and the revaluation process where you pay £56?

I have one on the go at the moment and I have asked the client to respond to an email confirming they understand all these issues before we proceed.

Thrugelmir

kingstreet wrote: »

Write to the advisor firm, heading your letter "complaint" setting out what went wrong and what you would like to happen to resolve it.

The firm has 8 weeks to investigate and issue a final response letter. Once you have that, if you are unhappy with the solution, you have the right to escalate the complaint to the Financial Ombudsman Service (FOS). A FOS decision is binding on the regulated firm, but not on you.

I guess this is Virgin Money with its 16 week offer period and extention process which sees you re-scored with a possible reduction in the amount offered if your circumstances have changed and the revaluation process where you pay £56?

I have one on the go at the moment and I have asked the client to respond to an email confirming they understand all these issues before we proceed.

How does the product work? In terms of financing stage payments. As the final value must be open to question, given the property isn't built.

kingstreet

TBH mine isn't a self-build, so my bit of it isn't quite the same.

A self-build normally sees the surveyor re-value at each stage, before the release of funds to ensure the final lending is within the LTV limit.

Moneyidiot

Amount was agreed with builder to finish to second fix. First offer allowed us roughly £25k to finish interior and landscaping etc.

Finished build was estimated at £230k but once extension was requested the property was downvalued by £15k based on housing market here. We weren't even informed by advisor that our build was revalued or even downvalued. We were told our finances were being reassessed. Apparently we went from 75% to a80% loan to value mortgage and that's why interest rate, hence monthly payments, increased. But we hadn't been informed nor agreed to this change wittingly.

I contacted financial ombudsman who is writing complaint to mortgage lender on our behalf. I spoke to advisor stating I'm not happy about how he failed to provide us with accurate terms and information. He has no problem with us making a complaint and is providing us with a form to do so, as he does not believe he has done anything wrong. The new offer was made on 22/5/13. We only received a copy of it 2 days ago when we queried our terms.

Thrugelmir

Moneyidiot wrote: »

We weren't even informed by advisor that our build was revalued or even downvalued.

Surely you were aware of the risks involved. You committed to a build price. The final valuation always being on a subject to basis.

Moneyidiot

Thrugelmir is it not a professional obligation of fin ads to do this i.e. make terms clear to clients before proceeding?

kingstreet

If any change in the agreed terms take place, a new key facts illustration should be issued by the advisor and again by the lender, as part of the mortgage offer.

For example, our process would be;-

- issue new key facts illsutration
- prepare factfind continuation explaining change and reason for it
- re-write suitability letter.

All three would be emailed to client and client asked to reply confirming their understanding and acceptance of the alterations.

I can't understand how contracts were exchanged or completion took place on this without you seeing the latest copy of the offer at the solicitor's suggestion.

Moneyidiot

Thrugelmir wrote: »

Surely you were aware of the risks involved. You committed to a build price. The final valuation always being on a subject to basis.

No - we weren't told our build could be revalued at any stage. As I said, we were told by fin ad that we had 6 mth to completion, not 16 weeks and expected our builder to be well finished first stage by that time. We were totally clueless and relied heavily on fin ad to provide us with the correct info.

He admitted that he should have realised that the interest rate would change when % loan to value went up. When we queried why our monthly payments were greater than we were expecting he didn't look into it. I phoned lender myself as I was getting frustrated and worried and they told me interest rate had changed.

Thrugelmir

Moneyidiot wrote: »

Thrugelmir is it not a professional obligation of fin ads to do this i.e. make terms clear to clients before proceeding?

Given the nature of the transaction. There is an obligation on the borrower too. As the contract you signed with the builder would have clearly specified the stage payments. Not defending the advisor per se. However the fact you seemed oblivious until the solicitor made contact doesn't make for a robust case.