Was I mis-sold?

Purple_girl

Hi, this is my first post and just looking for a bit of advice to see if our mortgage provider has mis-sold us our second mortgage.

We got our first mortgage on a fixed rate for 3 years. When the fixed rate was over we remortgaged with the same bank for another fixed rate for 5 years. In the middle of that 5 years, we took out a second mortgage with the same bank to do some home improvements. We went direct to the bank to arrange the second mortgage rather than through a broker.

At the time we were unwise to second mortgages and how they work alongside a current mortgage, perhaps this was our fault for being naive. We wanted to secure a good rate for a long time so we knew what our monthly outgoings would be and took the bank's offer of a fixed interest rate for 10 years. With the full term of the mortgage lining up with our first mortgage so they both be finished in the same year.

Now we're in a position where the 5 year fixed rate term on our first mortgage is up so we've remortgaged. However, we were told by our broker that other lenders are unlikely to take us unless we move both mortgages. But we can't do this without a hefty fee to get out of the fixed rate for the second mortgage (2.5 years into 10 year fixed term).

Our lender never told us that this would be the likely scenario. At no time were we told that when the fixed rate is up on our first mortgage that we will have to stick with them or pay to get out of the ten year fixed term on the second mortgage.

So basically, we are locked into them for ten years, and they knew this, but we didn't. Were we mis-sold or is it our fault for being naive?

Thanks in advance for any advice :-)

BoGoF

Naive, not understanding you had 2 different mortgages.....call it what you want but certainly not mis-sold.

ACG

You were told albeit maybe only in writing. You were told on the illustration and mortgage offer. There will be a section in your offer regarding Early Repayment Charges.

I am not sure you were miss sold, you wanted a product that would give you long term stability - they gave you that. You now need to remortgage your original part of the mortgage on maybe a 5 year deal and then maybe a 2 year deal to marry the 2 up in 7 years time to have the ability to move without incurring high ERCs.

You can not have long term stability in payment AND the option to switch and move, the 2 are generally speaking opposite ends of the spectrum.

SonOf

At the time we were unwise to second mortgages and how they work alongside a current mortgage, perhaps this was our fault for being naive.

You said you didnt use a broker and went direct. So, that cuts out of a lot the verbal warnings and questioning that would have taken place. Going direct is like any form of DIY. If you know what you are doing and can do it well, then you could save money. If you dont know what you are doing, you are prone to make mistakes.

Our lender never told us that this would be the likely scenario.

And did you ask them?

At no time were we told that when the fixed rate is up on our first mortgage that we will have to stick with them or pay to get out of the ten year fixed term on the second mortgage.

And why would you be told? The assumption is that you can count. Hower, the terms were given to you in the contract letter. So, what did you find difficult about those terms? Its not as if they are in small print either as they were pretty much standardised and made clearer in 2004.

Were we mis-sold or is it our fault for being naive?

Certainly not missold. Clearly naive.

Mortgage segment 1 on one tie in period. Mortgage segment 2 on a different tie in period. It would have been obvious from day 1 that the two do not match up if you had given it a bit more thought.

This is not a dig at you but too many people put more effort into researching and understanding the features of their mobile phone than they do their mortgage. Your mortgage will be in the top two expenditures in your life. Retirement planning with pension being the other. Yet neither get half the effort that they should get.

getmore4less

You won't have 2 mortgages, you will have a single mortgage with two loans secured against it.

If you want long term why not just renew the part that has expired on the current 10y deal.

Thrugelmir

You opted for a ten year product to secure a good rate of interest. No grounds for complaint now that you wish to move part of your mortgage to another lender to obtain another low rate product. You’ll need to move the entire balance. As had been said already you only have one mortgage, I.e. the legal charge placed on the property. Under which you can have numerous loans alternatively known as sub accounts.

foxy-stoat

Why not stay with the original lender and fix the rate again for another 5 years?

kingstreet

When you buy through a broker, you usually get a suitability report and on that report it talks about things like early repayment penalties and if there is an existing product how the ERC for that will impact you relative to the ERC on the new product.

Here's one we made earlier along those lines;-

You would like to port your existing NatWest mortgage product above to enable you to avoid early redemption penalties and achieve the longer-term payment certainty of a five-year fixed rate mortgage with no repayment overhang on a 28 year term and you are aware that the monthly payments from a shorter-term fixed rate would have been lower.

You understand that your current rate will end in March 2021; while the new fix will continue until October 2024. You will need to renegotiate each part of your mortgage separately to avoid the lender’s standard variable rate.

If you go direct, you may not get the thoroughness you see from a typical broker.

ACG

kingstreet wrote: »

When you buy through a broker, you usually get a suitability report and on that report it talks about things like early repayment penalties and if there is an existing product how the ERC for that will impact you relative to the ERC on the new product.

Here's one we made earlier along those lines;-



If you go direct, you may not get the thoroughness you see from a typical broker.

Currently got one of these going through at the minute (the first I have ever done) and although I have emails going back and forth where we have discussed it, I never thought to put it in the letter.

kingstreet

On the basis you get people querying why a two year fix ends on (eg) 31/12/2019 and not two years from completion I'd say anything which could give rise to doubt is worth adding.

As you know, we issue the letter with the illustration, IDD, factfind and copy of mortgage app and insist on an email confirming receipt and understanding we make sure any potential doubts are sorted up-front.

Our RWL is still only a page and a half of A4 and a lot of that is taken up with the "don't pay money based on an email request" warning.

[Deleted User]

kingstreet wrote: »

On the basis you get people querying why a two year fix ends on (eg) 31/12/2019 and not two years from completion I'd say anything which could give rise to doubt is worth adding.

As you know, we issue the letter with the illustration, IDD, factfind and copy of mortgage app and insist on an email confirming receipt and understanding we make sure any potential doubts are sorted up-front.

Our RWL is still only a page and a half of A4 and a lot of that is taken up with the "don't pay money based on an email request" warning.

Is that a compliance requirement or just your best practice after being stung in the past? I like the idea of sending the FF and App but never done that. Only send the RWL generally.