Mis-sold Interest Only Mortgage

nissan25

Hi All


Thoughts from you experts on below:


My Mum was persuaded to purchase her Local Authority home in October 2006 despite being on benefits - DLA, Income Support and full Housing Benefit.


The broker advised she was getting a huge £24k discount due to long term tenancy and property prices were only going to go up (boom) and this would be a great investment for future.


Anyhow she proceeded thinking she wouldn't get a mortgage at 59 years of age and not working. She did - Preferred Mortgages - interest only - which after the collapse was taken over by Capstone and Acenden. The broker applied for additional capital to cover fees and for home improvements. Mum was covering the payments with her DLA payments but struggled.


It all became too much for her and in 2010 I re-mortgaged the property with her with Halifax and I pay the bulk of the payments. This has rendered me unable to obtain another mortgage for a property of my own.


Any advice welcomed.

ACG

What changed in 4 years? (2006-2010), How was your mum able to pay it for that period but then struggle?

p00hsticks

nissan25 wrote: »

Hi All


My Mum was persuaded to purchase her Local Authority home in October 2006

by whom ? ....

nissan25

She always struggled from the start but as the extra capital from the mortgage was not all used for the home improvements she used that and her DLA benefit payments. As she got older I did not want to have such burden on her and remortgaged.

nissan25

poohsticks - by the broker - aggressive tactics were used in terms of sales / home visits etc

dunstonh

The broker applied for additional capital to cover fees and for home improvements. Mum was covering the payments with her DLA payments but struggled.

If she was struggling, why did she want to pay for home improvements?

The broker advised she was getting a huge £24k discount due to long term tenancy and property prices were only going to go up (boom) and this would be a great investment for future.

How much was the house worth then and now?
How much was borrowed at that point?
How much is outstanding on the mortgage now?

There are very few successful missold mortgage complaints. The ombudsman discussed this in a meeting I went to last year. Their view was that in the majority of cases, the person has benefitted from the increase in house prices. Whereas if they were renting, they would still be paying that each month and have no equity.

Could your mum equity release?

gardner1

nissan25 wrote: »

Hi All


Thoughts from you experts on below:


My Mum was persuaded to purchase her Local Authority home in October 2006 despite being on benefits - DLA, Income Support and full Housing Benefit.


The broker advised she was getting a huge £24k discount due to long term tenancy and property prices were only going to go up (boom) and this would be a great investment for future.


Anyhow she proceeded thinking she wouldn't get a mortgage at 59 years of age and not working. She did - Preferred Mortgages - interest only - which after the collapse was taken over by Capstone and Acenden. The broker applied for additional capital to cover fees and for home improvements. Mum was covering the payments with her DLA payments but struggled.


It all became too much for her and in 2010 I re-mortgaged the property with her with Halifax and I pay the bulk of the payments. This has rendered me unable to obtain another mortgage for a property of my own.


Any advice welcomed.

Why on earth did she think that with only DLA/IS/HB that she could afford it

nissan25

gardner 1 - because the broker told her that her DLA payment alone would cover the mortgage (interest only) with ££ left over and she had everything to gain such as sharp rise in house prices, investment for family etc

nissan25

dunstonh - home improvements - self explanatory. It was previously council owned property who did not invest in their properties - kitchen and bathroom required modernized and upgraded heating system and general painting/decorating.


The house was valued at £120k now approx £85-90k (neg equity)
Original mortgage £110k (less discount 24k)
Still interest only mortgage at present when I remortgaged in 2010 so approx. £100+k owing - I am changing to repayment soon
Not sure about equity release very complex

ACG

Home visits do not mean sharp sales tactics. I visit people in their homes, I prefer it - not because I earn more money or convert more but it is always nice to meet people you are working with. Some people bring their parents or a friend which is fine.

Was the mortgage (the one your mum took out) less/the same as the rent?

I can see your point, but I think you need to get the relevant paperwork and check. You being unable to get a Mortgage is irrelevant. It would be to do with how your mum got a mortgage she could not afford. If the mortgage was equal to or less than the rent then you are going to struggle to win any sort of argument I suspect.

haras_nosirrah

where in the country is housing worth less now than it was in 2006?