Case of Miselling of Mortgage Renewals

newbie_saver_2020

I imagine this has been raised before but just in case it hasn't. So,  the 2 years fixed rate was coming to end in April 2020. Bank wrote a letter around Christmas offering to fix the rate for  further 2 years. In fact, I was offered the benefit to switch to a lower rate earlier than April to lock the lower rate. However, letter doesn't mention anywhere that if you switch earlier than the last month of 2 yrs (i.e. March), you lose out on the benefit of paying any amount  in the last month without paying any ERC. So, even if you could pay a bit more to get closer to dream of mortgage freedom, switching early  means you are stuck with mortgage longer! Is that miselling or am I being too casual with the word?

ACG

Did they sell you the mortgage? Or did they tell you about some of your options and you made the decision on what to do? - you need to have a read of the paperwork. I suspect it was not an advised process, in which case you would be relying on the lender to offer a goodwill gesture. 

Its interesting as the FCA have been strong supporters of advised sales to ensures customers are protected, but this month they seem to have done a 360 and are now open to customers being able to switch products without advice. In your case, it sounds like you might have been better having advice and someone to run it by. 

John_

No, it's not mis-selling. Why did you not ask if this was something that you were concerned about?

newbie_saver_2020

Many thanks for responses. The initial mortgage was bought through by myself on 2 years fixed rate. So, it's perhaps  not miselling but I feel a little misinformed because the letter recommended switching earlier so as to not lose out on low fixed rate i.e.not face risk of paying the higher standard rate. But nothing about losing on the benefit of paying overpayment higher than 10% with no ERC. Switching earlier effectively changed the terms of my pre-existing mortgage without clear advice provided in the offer letter.
Anyway, I certainly hope MSE mortgage pages could have this information as something to watch out when considering renewing the fixed rate. I think its quite valuable nugget of fact, don't you? though i am sure obvious to experienced folks
Thanks again for your thoughts!

SonOf

Case of Miselling of Mortgage Renewals

Mortgages do not renew.  So, you cannot be missold a mortgage renewal as there is no such thing.
Maybe this is why you are confused.    You buy a mortgage for say 25 years and get a deal for a lesser term. in your case 2 years.   The deal terms have a defined start date and expiry date.  If you buy a new deal, the new deal terms replace the earlier one.   

So,  the 2 years fixed rate was coming to end in April 2020. Bank wrote a letter around Christmas offering to fix the rate for  further 2 years.
Quite common and normal for a new deal to be offered when the existing deal is expiring.  So, all good so far.

In fact, I was offered the benefit to switch to a lower rate earlier than April to lock the lower rate. However, letter doesn't mention anywhere that if you switch earlier than the last month of 2 yrs (i.e. March), you lose out on the benefit of paying any amount  in the last month without paying any ERC.

A new deal ties you into new terms which are given to you to agree before you are moved onto them.  It is patently obvious that if you move over before the end of the term then there won't be a period where no ERC exists.

So, even if you could pay a bit more to get closer to dream of mortgage freedom, switching early  means you are stuck with mortgage longer!
And that is a decision you need to make when you are looking to buy a new deal.     i.e. do you wait or do you do it early.

Is that miselling or am I being too casual with the word?
It is not misselling.

 I feel a little misinformed because the letter recommended switching earlier so as to not lose out on low fixed rate 
Did you not read the mortgage offer letter you agreed to?
It is important to remember that a a marketing letter is not regulated financial advice.   
Offering you a new deal to not miss out on a low fixed rate is not regulated financial advice.  It is marketing.     However, the terms would have been disclosed and you agreed to them.  Rate retentions are not normally advised.  So, you cannot complain it was bad advice if no advice was given.  If you had gone to your mortgage adviser, then they would give you advice and if you raised the point about wanting to pay off some of the mortgage then the adviser would be responsible for making sure you could.  Without a mortgage adviser being involved, you take on that responsibility.

Switching earlier effectively changed the terms of my pre-existing mortgage without clear advice provided in the offer letter.
It sounds like you didn't seek advice and therefore advice was not given.  They cannot give advice if you have not asked for advice.

I think its quite valuable nugget of fact, don't you?
If it is that valuable, why did you not consider it before buying a new deal and agreeing to the terms provided to you?

ACG

newbie_saver_2020 said:

because the letter recommended switching earlier 

Did it? Recommend is the key word. 
If it recommended you switch now, then yes you potentially have a claim as they have made a recommendation without assessing your requirements. If it was just informing you that you can switch and some of the downfalls for now switching (ie SVR) then it is not miss selling. The alternative could be to not inform you there are cheaper products than SVR and then you sit on the SVR for however long overpaying - you may not be one of those people but those people are more common than the ones who want to overpay more than 10% of their balance in a year. 

dimbo61

Have you got a spare 10% of the mortgage balance available to overpay ?
If so and the savings are earning less than the mortgage rate overpay on Monday 
Simple really 

Postiekent

Has any body had dealings with the Trusted mortgage reclaim website is it a scam or do they work ta

davidmcn

Postiekent said:

Has any body had dealings with the Trusted mortgage reclaim website is it a scam or do they work ta

You'd be better to start a new thread rather than adding a comment onto an existing post about something else.

ACG

Have a look into CMCs. 
Typically they "only" charge from the commission. But many also require you to purchase an insurance policy... 

Take what you want from that, all I know is that we cant tell people we only charge on results and then charge for an insurance policy.