Mis-sold mortgage?

Polly

I'd appreciate some advice on an issue related to a relative of mine. She's 39 years old, single with no dependents and has been in full time employment for over 15 years. In 2007 she went into Alliance & Leicester to apply for a mortgage for £46,000 and took their recommendation on the best product for her needs. She didn't take advice from anyone else and didn't check online or elsewhere for a better deal. She was sold a 35 year mortgage with associated insurance policies and despite making repayments for 8 years, still owes more than she borrowed. She asked me last week to help her move her mortgage and using MSE tools, she has now made a successful application for a Nationwide 5 year fixed rate mortgage, having spent 3 hours with one of their advisers.

I feel she was sold an unsuitable mortgage by A&L and would like advice on how to follow this up. She was well able to make much higher repayments on a shorter term and the new NW mortgage is for only 12 years. In addition, the insurance policy to cover the mortgage in the event of her death did not match the term of the mortgage and was due to run for only 32 years. Does this sound like mis-selling and if so, what should she do?

betmunch

First thing to do is check if she was advised or not.


This will be specified on the IDD.


Many people think they were advised when they were not so do check the paperwork. Just to have an appointment does not necessarily constitute advice, or at least it didn't then

kingstreet

Alliance & Leicester in 2007? Really?

I thought the Santander rebrand was well over by then. 2010/2011 apparently.

Prior to 26 April 2014, lenders were not required to give advice. The provided information only and the borrower was expected to decide what was most suitable for them.

As bm said, you need to establish if advice was sought and given before you embark on any further action.

getmore4less

Have a look though the annual statements to discover where thigs went wrong on the payments to owe more now.

Thrugelmir

Polly wrote: »

despite making repayments for 8 years, still owes more than she borrowed.

Please clarify.

Was the mortgage interest only?

She was well able to make much higher repayments on a shorter term

Most likely down to the fall in interest rates in the intervening period. There was nothing to stop her making overpayments.

She was well able to make much higher repayments on a shorter term and the new NW mortgage is for only 12 years.

What happens if interest rates rise sharply? They are not going to remain at current levels indefinately.

Nearlyold

If this is a repayment mortgage and she has always made the required payments it should be impossible for her to owe more than she borrowed after 8 years. Don't forget that in 2007 the Bank of England base rate was around 5.25% (currently 0.5%) and no one predicted it was going to fall so dramatically so she might have liked the idea of a 35 year loan at the time to keep repayments down particularly if this was her first home where she might have expected additional expenditure for furnishings appliances etc. and give her some wriggle room in case rates rose

dunstonh

She was sold a 35 year mortgage with associated insurance policies and despite making repayments for 8 years, still owes more than she borrowed.

That is not possible unless
a) she has borrowed more at some point
b) she has gone into arrears at some point.

She didn't take advice from anyone else and didn't check online or elsewhere for a better deal.

Unless it was an advised sale, she cannot complain about mis-sale.

I feel she was sold an unsuitable mortgage by A&L and would like advice on how to follow this up.

But you already said she was not advised.

In addition, the insurance policy to cover the mortgage in the event of her death did not match the term of the mortgage and was due to run for only 32 years.

That is a quite possible as some providers will only go to a maximum age and tied agents of banks and building societies can only offer what they have. Not what is available on the open market. That does not make it mis-sold.

Jon_B_2

Is your relative of a sound mind and able to read?

amnblog

Your relative was not given 'advice'. She was given 'information only'.


That was the position going direct to Lender prior to April 2014 as KS says.


If she can prove the information she was given was incorrect she might have an argument. It is highly unlikely she has a case.

shortchanged_2

Where did manage to find such a cheap property in 2007?

Did she put down a substantial deposit?

As others have stated it appears your relative took an interest only mortgage and may well have added to it over the years.

No she hasn't been mis-sold as an adult she is ultimately responsible for her own financial decisions.

makes-sense

Why not get her to complain to the business or give the financial ombudsman service a call on 0300 123 9 123 or 0800 023 4567?