Mis sold mortgage?

Lookingforadvice11205

I have seen a few threads like this and people being told there is limited success for this kind of claim. I just wanted some advice based on my own corcumstances.

Myself and my partner were sold a subprime interest only mortgage in 2007 the interest rate was 6.29. It was for the value of £90500,£ 87,500 mortgage amount and the rest were buying fees added to the mortgage. I was not advised to take out any savings etc to work towards paying the capital. I was not told that this was a sub prime lender or a high interest rate for a mortgage. The property was recently valued at 75,000 so I am significantly in negative equity. We were on low incomes and were charged a higher lending fee, I was 19 and pregnant at the time and we thought it would be best to have somewhere stable to live, both living with parents at the time. We had some debt and missed payments and things on credit file as far as I can remember but no ccjs or anything like that. We did benefit from interest rates dropping when the variable rate kicked in after 2 years and I believe my interest rate is now 5% ish.
I looked up help for people in negative equity and spoke to a company who started talking about mis selling, I didn't really understand the responsibility of broker at the time.

Does this sound like the basis for a misseling claim? The mortgage was with Gmac now mortgage express.

Thanks for any advice, we now have 2 children in a 2 bedroom flat and can't afford to move and can't remortgage as negative equity.

Thank you

ACG

Why are you saying it was miss sold?

Negative equity - that is not the brokers fault.
Interest only - if your incomes were low, this allowed you to get the property on an easier affordability calculation.
Sub prime - you have said you had missed payments. Whether or not the adverse you did have was bad enough to have to go for a sub prime mortgage only your broker will know. Missed payments, low incomes and interest only is never a great mix so you probably were limited to sub prime lenders.

Now a days it would not be possible to place, but we are talking 10 years ago. It was a very different world back then. To be fair, the broker actually got you what you wanted - security. You have probably paid less on repayments than you would have in rent?

On a side note, that rate is not actually that bad. I remember seeing a Halifax Mortgage sold in 2006/2007 at a rate of 5.99% and that is a high street lender.

If you want to complain, you are well within your rights to. But do it yourself. Dont pay claims management companies to do something you can do for free. They will tell you whatever you want to hear if they are charging an upfront fee.

AnotherJoe

Lookingforadvice11205 wrote: »

Myself and my partner were sold a subprime interest only mortgage in 2007 the interest rate was 6.29. It was for the value of £90500,£ 87,500 mortgage amount and the rest were buying fees added to the mortgage. I was not advised to take out any savings etc to work towards paying the capital.

I was not told that this was a sub prime lender or a high interest rate for a mortgage. The property was recently valued at 75,000 so I am significantly in negative equity. We were on low incomes and were charged a higher lending fee, I was 19 and pregnant at the time and we thought it would be best to have somewhere stable to live, both living with parents at the time. We had some debt and missed payments and things on credit file as far as I can remember but no ccjs or anything like that. We did benefit from interest rates dropping when the variable rate kicked in after 2 years and I believe my interest rate is now 5% ish.
I looked up help for people in negative equity and spoke to a company who started talking about misselling, I didn't really understand the responsibility of broker at the time.

Does this sound like the basis for a misseling claim?

No it doesn't.

Lookingforadvice11205 wrote: »

Thanks for any advice, we now have 2 children in a 2 bedroom flat and can't afford to move and can't remortgage as negative equity.

Thank you

If you paid off the negative equity you could move, but then if you couldn't afford to save enough to do that over the past few years you couldn't have afforded to pay down the capital so the fact you believe you weren't advised you needed to save money to pay off the £90.5k* is a moot point. If you could have afforded it you'd have enough saved to pay it.

What did you do with the money you had spare due to the total payment being lower as its interest only? If your answer was "we didnt have any spare" well then what else other than an interest only mortgage could you have got?

Most likely you've paid less than if you were in rented but even if it turns out to have been a bad move in retrospect because of the negative equity now, you dont get to make a one-way bet where if there's negative equity its the lenders fault or if you make a profit, you keep it all. You wouldn't be in favour of the lender taking your positive equity if the situation was reversed.

* just out of interest, what did you think would happen to that £90.5k you borrowed?

TrickyDicky101

Somewhat earlier than you but my wife and I took out our first mortgage mid-2005 with Nationwide at a LTV below 70% at a rate of 4.95% - the BoE base rate didn't fluctuate a great deal as far as I can remember from that point up to when you took your mortgage so your rate of 6.2% really wasn't that bad at all (especially if sub-prime).

dunstonh

I was not told that this was a sub prime lender or a high interest rate for a mortgage.

You are not required to be told "this is a sub-prime mortgage" (lender doesnt matter as many lenders do prime, near prime and sub-prime).
Since October 2004, there has been a defined layout for mortgage illustrations and these show you the interest rate and terms of your mortgage. So, you would have been told the rate.

A mortgage rate of 6.29% in 2007 is not sub-prime levels. In Sept 2007, the average SVR was 7.69%. Sub-prime rates are typically much higher than the average.

I was not advised to take out any savings etc to work towards paying the capital.

By 2007, endowments no longer existed. Mortgage brokers are not investment advisers. So, they cannot advise you on investment options. The documentation issued would have told you that you should have a repayment plan in place. So, you were told on paper.

Whilst it would not be suitable for a mortgage broker to do interest only mortgages now without making sure repayment vehicle/method is in place, there was no requirement on a mortgage broker to do that in 2007. The FOS reject complaints about interest only being a reason on pre-credit crunch mortgages saying that they were accepted at the time of sale.

I have read through a number of missale complaints at the FOS and it seems most are generated by CMCs and most end up rejected. The FOS responses are very similar with each. The FOS have a particular language style and you can almost see a level of frustration by the ombudsman that they are dealing with another CMC generated mortgage missale complaint. The responses are almost template which is unusual for the FOS.
e.g. (copy and paste from a rejection)
I consider that xxxxx acted in accordance with FSA rules in place at the time and
that Mr and Mrs F were given all the necessary information to make an informed decision.
and

Suitable warnings about repaying the interest-only mortgage were given in the mortgage
offer, and xxx (and the lender) set out details of the fees and charges to be incurred in
setting up the mortgage.

and this one covering the usual CMC template about never being told about a repayment vehicle.

I acknowledge that Mrs B says she didn’t receive xxxx ‘Letter of Advice’, or any
of the documents in which it explicitly said it had not set up a repayment vehicle.
However, I’m mindful that she didn’t receive any documents to show that xxxx did
set up a repayment vehicle. If she’d expected xxxx to arrange an endowment
policy, then I find it surprising she didn’t ask xxxxfor details of that policy in 2007.

I just read several more and its clear that some CMCs are just making up reasons they hope stick and in a number of cases, the reasons they use for saying it was missold are quite daft and clearly try-it-on.

We had some debt and missed payments and things on credit file as far as I can remember but no ccjs or anything like that.

Missed payments, especially if recent (at the time), would have an impact on lender choice.

I looked up help for people in negative equity and spoke to a company who started talking about mis selling, I didn't really understand the responsibility of broker at the time.

Being in negative equity has nothing to do with the broker and is not a reason for complaint. It is something that can happen at any time to anyone and is just one of the risks of borrowing money.

There is very little success on mortgage complaints about misselling. There are not many claims companies getting involved in this area because of that. Those that do, tend to have an upfront fee. Or more commonly, tell you that you about a month later that their "experts" have found that it was missold but to progress it further they need a fee. Its a complete scam but that is the nature of these things.

we now have 2 children in a 2 bedroom flat and can't afford to move and can't remortgage as negative equity.

That is unfortunate but it is one of the risks of borrowing money. It is not a reason for complaint.

Nothing you have said suggests a missale.

Out of interest, what region do you live? A £90k house in 2007 should be higher in value. There are the odd places where it isnt (such as some of N Ireland) but its not common

haras_nosirrah

That is not a sub prime rate - I got a 2 yr fixed rate mortgage with santander for 5.39% in 2007 with a 50% deposit and as a fast track applicant (so not proof of anything as my credit score was so good).

Thrugelmir

Lookingforadvice11205 wrote: »

Thanks for any advice, we now have 2 children in a 2 bedroom flat and can't afford to move and can't remortgage as negative equity.

What steps are you actually taking to improve your situation. However small they maybe. There's no magical answer just a long slow road of hard graft. You'll find plenty of advice and support on the Debt Free Wannabe Forum.

dlmcr

You've had some fantastic advice on this thread, OP, and there is enough in terms of information and people in similar situations on this and other forums to fill a novel so what I can offer in terms of suggestions will probably be the caustic and unhelpful depending on how you want to read it.

So it is 10 years since you "obtained" (let us put whether it was mis-sold or not to one side for now) your mortgage. So that is a long time to do things like reflect on what you have been sold and what it does, what you have been paying down every month, what an interest only mortgage means, whether you might need to be putting money aside to move to a new place for your bigger family, looking to see what the options were in terms of re-mortgaging, getting training to get better paid jobs or promotions, and in particular thinking about being nearly halfway through your mortgage where only the interest part of it is being paid off and not having any vehicle in place to pay off the capital.. So, 10 years is almost half the life of a typical mortgage so as you can see a lot of time to reflect on things and decide whether changes might need to be made. There is no real excuse to say that you didn't know at the time what you were sold, 10 years is enough time to learn and understand what that product is and how it will cause problems later in life. The world in 2007 was a very different place to what it is now, as a certain politician said "things can only get better", nobody imagined a financial crises would ever occur far less that house prices would ever go down to pre 2007 levels.

When you made your opening post, can you say, honestly, that you have done much reflection on things, or did you instead wake up one day, 10 years on from 2007, and thought that through your own choices in life you are not now in a place where you would be able to move to a bigger house or flat, and so instead of taking responsibility moving forward, for the sake of your family, you thought it might be easier to look to blame somebody for, for example, mis-selling you a mortgage? Without trying to come across as judgmental did you make the right choices in life?

You've been given good advise by other posters, mine is not what you want to hear. Factually you have not been mis-sold a mortgage, people with much more intelligence and knowledge than me have told you that. It is easy to belive that you are in negative equity, there are many more places in this country than most people believe that have lower prices than they did in 2007. It is what it is, there is nothing you can do about the last 10 years now. As hard is it is to break old habits why don't you move on and try and think about formulating a plan so that in 2027 would won't be making your first post about being missold a mortgage and instead you will be in a better position with yourself and the life of your family?

Lookingforadvice11205

Thank you for your response. I am not saying it was Mis sold I was looking for advice on whether it was or not.

Had a few judgemental and unnecessary comments and so closing the thread down no need for further reply.

Lookingforadvice11205

You failed if you truly meant to come across as non-judgemental.

I had not considered mis selling until speaking to someone looking for help re negative equity. I did not seek out info re Mis selling at that stage and now just wanted advice to find out if what happened constitutes as such.

I am not looking to blame anyone and comments on my life choices considering you know very little about me or my circumstances in the past 10 years are unnecessary.

Lookingforadvice11205

All that I was looking for was advice on whether any of this constitutes misselling.

Your answer of no is sufficient so thank you for that