Have My mother been mis-sold a mortgage?

RedRobbo

Dear All,

I am trying to find out if my mother has been mis-sold a mortgage, please let me know if this is correct?

My Mother in 2002 purchased a house for £325,000 at the age of 55 in West Yorkshire. In 2008 she was advised buy my sister to remortgage as my sister worked for an incentive driven large London estate agents. The remortgage company advised that as my Mother had retired she should be able to get a buy to let mortgage only despite living in the property. They valued the property at £700,000 despite local agents at the time valuing the property at £499,000 and agreed to release some cash to her as an incentive.

My Mothers income through her pension is £14,000 per year and the interested only mortgage that she signed up for costs over £1,000 per month on the interested only mortgage.

I have help my mother with repayments when she gets behind to a total of over £50,000 but I can't carry on this way and need to find a solution, hence why I am reviewing everything currently.

What I need to understand are any of the points mis-selling:-
1. If the mortgage company sold my mother a buy to let mortgage when the mortgage company new full well that this was not a buy to let property?
2. The mortgage company over values the property.
3. The mortgage provider new full well that my mother would not be able to meet any mortgage repayments.

Thank you for your thoughts and help in this matter.
Charles

TrickyDicky101

What was the amount she remortgaged for? Ie what did she Boris at the time of the remortgage

The remortgage was taken out post 2004 so regulation on residential mortgages was in place, however a btl is a commercial arrangement (which maybe why the remortgage was extended to your mother in the first place) which I think is outside the scope.

I'm sure one of the experience brokers will be on shortly to provide their professional opinion

RedRobbo

£375,000 on top of the £325,000

SavingSteve

Where did the extra money she borrowed go?

Keith99

RedRobbo wrote: »

£375,000 on top of the £325,000

She borrowed upto the valuation then? Which was higher than local estate agent valued it at?

What is the property worth now, can she sell it and move some where smaller?

davidmcn

RedRobbo wrote: »

£375,000 on top of the £325,000

A 100% interest-only BTL mortgage? Did such things exist, even in 2008?

There might be negative implications for mum if she confesses to the mortgage company that it isn't a BTL property.

Also, what remedy is she expecting, if she's not arguing that she could have been legitimately sold a better deal for a £700k mortgage? She still owes the money.

TrickyDicky101

Less than 2% interest on a BTL (or thereabouts)? Something does not add up here...

exiled_red

What did she use the money for? It seems very strange to remortgage a house which you bought for £325k for £700k unless she was planning on buying something like another house or was planning to invest it in something else.

Your post makes it sound like she took the money because she could, but she must have known that the repayments would be alot more and that she would have know that here income wouldn't cover the repayments. It sounds like what was done at the time of the remortgage shouldn't have been done, but from your post it sounds like your mother had everything explained to her at the time and for some reason agreed to this scheme.

Thrugelmir

RedRobbo wrote: »

In 2008 she was advised buy my sister to remortgage as my sister worked for an incentive driven large London estate agents.

Sounds like there's something missing from this tale.

ACG

There does seem like there is something missing.

But rather than blaming the lender, the person at fault here seems to be your sister (and her employer). Why has she talked your mum in to converting to a buy to let mortgage and borrow an extra amount knowing that her income is not enough and that it will mean it does not get paid off?

RedRobbo

Apologies all, outstanding mortgage is £375.000.

Mother has used the money for spending, nothing else so please don't feel sorry for her. I am just trying to understand if there is anything I can do to maximise the most amount of money to purchase a house and live out the rest of her days.