Mis-sold first time buyers scheme?

hollie113

Hi everyone,
I've searched the Internet for answers to my question and can't find anything so in a last ditch attempt I thought I'd see if I can get any answers or advice here.
In October 2012 my husband and I bought a new build house on a first time buyers scheme; this involved a mortgage for 75%, 5% deposit, 10% loan from the house builder and 10% loan from the housing association isos. At the time we had to use the builders mortgage advisors new homes mortgage services (or something like that) and they sold us the scheme as being interest free for 5 years with the interest then being added to the loan amount which would be paid at the end of the term and we could pay a minimum of 10% of the loan back anytime we wanted. It turns out that by 10% they actually meant 10% of the value of the property and therefore 50% of the loan value which would be near enough £20k! And the housing association have contacted us already asking for our bank details so they can start the direct debit monthly of the interest, so it's not added to the loan as we were told. Additionally the mortgage advisors told us it would be easy for us to remortgage after our initial 2 year mortgage deal to borrow the additional money and extend the mortgage term but when it came time to get a new deal and I phoned them they told us that there was no way we'd be considered for this and that the property wasn't worth any more than when we bought it for even though we hadn't had a valuation and made me feel like there was no point in contacting the banks directly. On top of all this we had a right carry on with life insurance which we 'had' to take otherwise we had to pay an additional £250 in fees to use the mortgage advisors services; we cancelled before an apparent 2 year minimum term which we had no paperwork to support and we were notified by text message that if we didn't reinstate the policy we'd have the money taken from out account within 5 days.
I feel as if what we've ended up with is completely different from what we were sold and if we'd known then what we know now we would never have entered into the scheme because financially it was completely unrealistic to think we could have paid off the loan in 5 years and we genuinely thought from their advice that it wouldn't matter because we'd be able to remortgage and get the loan money added onto the mortgage so we would have to worry about paying anything back in 5 years.
Am I right to feel mis-sold? And if I am, what can I actually do about my complaint?
Thanks all

AnotherJoe

I would say all the papers you signed at the time will reflect what the reality is that you describe now and that you'd be into a he said she said situation that you were told different two years ago, and won't get anywhere.

You should check what the documents say just in case they say something different but I'd be very surprised if they do.

Thrugelmir

There's no standard mortgage products that allow a roll up of the interest without there already being equity in the property. Wouldn't be allowed as the debt would simply compound out of control.

betmunch

Firstly, could you have bought the house without the scheme? If not I don't think you can claim any mis-selling.

If you could then I think you have a very slim chance, but someone that knows better than me might say no. You need to show what loss you have made due to this before making a complaint. Where have you lost money?

With regards to having to take life insurance to avoid the fee, this has been shown to be acceptable as the commission on the life insurance allows the advisor to provide free mortgage advice. It caveat is that the insurance must be relevant to the mortgage. Life insurance on a joint loan would be relevant.

I may have missed some stuff as your op is long and a single paragraph, it might be worth editing and breaking up the details

hollie113

Thanks all, I guess you're all right and that my paperwork will probably say one thing vs what I was told verbally. I don't suppose in the long term that it will matter and all will iron out.
Glad I got to sound it out at least.
Thanks again :-)

pathtofreedom

Have you talked to a mortgage broker about the possibility of remortgaging? Or get a couple of estate agents in just to get an idea of a valuation if you were to sell?

What is the local market like in that area, and what ltv are you trying to get?

How much of the mortgage have you paid off (not just the interest) and the loans to figure out how much equity you have now. As if you're deposit was only 5% originally, you'll need to have been overpaying quite a bit I'd think, to be able to get enough equity to remortgage with say an 80% ltv to convert some of the loan into the mortgage instead if that's what you're trying to do.