Mortgage Miss-sold ?

6golfview

Around 12 years ago i bought a new house, at the same time I was hoping to sell a development site that would almost match the loan amount.
I wanted to retain some flexibility when the money came in so the bank suggested I take an off-set mortgage.
10 years later and site still not sold (long story), so we moved onto a fixed rate deal - the monthly cost went from c£2,300 to £650 - limited capital repayment under both loans.
We now look like we will eventually sell the development site and pay off the mortgage, however, wondering if the bank should have sold that product under the circumstances ?

Hasbeen

6golfview said:

Around 12 years ago i bought a new house, at the same time I was hoping to sell a development site that would almost match the loan amount.
I wanted to retain some flexibility when the money came in so the bank suggested I take an off-set mortgage.
10 years later and site still not sold (long story), so we moved onto a fixed rate deal - the monthly cost went from c£2,300 to £650 - limited capital repayment under both loans.
We now look like we will eventually sell the development site and pay off the mortgage, however, wondering if the bank should have sold that product under the circumstances ?

So you wanted flexibility and they suggested an offset mortgage?

You decided to take it.

It did not work out selling the site, so you now think you where mis sold?

Why did it take you 10 years to get a fixed deal?

6golfview

Selling the site kept looking like a possibility through that period, hence the 10 years.
I didn't say I thought I was miss-sold, merely wondering if that was a possible route.
From memory the off-set rate was 4% versus 1.5% on fixed deals - should the bank have advised that route if there was no definite off-set proceeds coming in the short term ?

Seashell517

6golfview said:

Selling the site kept looking like a possibility through that period, hence the 10 years.
I didn't say I thought I was miss-sold, merely wondering if that was a possible route.
From memory the off-set rate was 4% versus 1.5% on fixed deals - should the bank have advised that route if there was no definite off-set proceeds coming in the short term ?

You told them what you expected to happen. They told you the best product if that were to be the case. Why would they know that your plans would not work out?

ACG

You told them you were selling a site that would clear the mortgage more or less - we (Advisers) can only go off what you tell us. An offset would have meant you had no interest to pay or early repayment charges if/when you cleared the balance. Nothing in life is guaranteed, but based on what you would have said I would personally think the recommendation was sound. You could have told them at any point between recommendation and completion that the sale was no longer proceeding and it might be worth revisiting the advice. 

Offset mortgages are far more flexible than a fixed rate mortgage, which is what you wanted. 

Are you sure a fixed rate mortgage 10 years ago was 1.5%? Offset mortgages are more expensive but not 2.5% more expensive. I bought a house in 2012 with a 15% deposit and the rate was 3.5%. 

Personally, I do not think it was miss sold from what you have said. 

6golfview

OK, I appreciate the advice, thank you.

getmore4less

Looks more like a mis bought mortgage than mis sold from the limited info.

Which lender  there were some seriously good offset options around(I have one).

There was the OneAccount that stood out as not so good.

More details needed of the actual deal to have any idea if it was reasonable at the time.  

The benefit of an offset was you can overpay(offset) as much as you like and get the money back at anytime so no capital limits as you suggest,  that was what you wanted if you sold the plot, offset a load of cash.


There is something not right about a change from ~£2.3k offset  to ~£650  on a repayment
That is not just a rate change issue

How much did you borrow 12 years ago on what term and what was the mortgage 2 years ago

 

dunstonh

From memory the off-set rate was 4% versus 1.5% on fixed deals - should the bank have advised that route if there was no definite off-set proceeds coming in the short term ?

No. Banks provide transactional advice.  Not ongoing advice.   They set your mortgage up based on your objectives and then move onto the next person.  You are the one responsible for making sure your financial products are still suitable.      Once you realised no funds would be available for offset, you should have instigated another conversation with the bank or a mortgage broker.
I also suspect your recollection of rates or the timescale is not quite correct.   The credit crunch saw interest rates drop quickly and 12 years ago would plonk you right in that.    The scale of difference you mention either means you picked a particularly expensive offset mortgage or you are looking at rates from that era rather than rates specific to what was available at the exact same time.     The difference is too big to be realistic for deal types offered at exactly the same time.