Feel Ripped Off by Mortgage

Mark_Lion

I feel very depressed by my situation.
Had a mortgage broker at Jelf Financial Planning Ltd, in 2009 arrange my mortgage. I was/still am single income. Working for NHS ambulance driver, so low income. 
Estate agents told me about First Home Buy, Help To Buy loan through Catalyst Housing Group. Offically called My Choice Home Buy Scheme.
Jelf said their brokers can arrange this for me. The broker told me I can get £81205 repayment mortgage and £81205 equity mortgage. I had a £17500 deposit. 25 years mortgage.
So in September 2009, I bought a house in College Town, Sandhurst for £175000. It is a 2 bedroom, end of terrace.
At the time, I read through the mortgage contracts, but did not see or understand Equity meant Interest only.

I currently have a (I think 10 year fixed term, 8 years remaining) with Nationwide. Also have been overpaying, so if continued current overpayments, mortgage would be paid off in about 4 years.

Last Wednesday, I phoned Catalyst to ask some questions. I was shocked to learn theirs is interest only.
I want to get rid of Catalyst asap. 
While talking to Catalyst last week, I learned my mortgage loan increases with inflation, so the amount will be much higher now.

At the time of taking out the mortgage, the Jelf adviser told me if I sold the house before completing paying mortgage, I would have to pay 43.6% of the house sale price to Catalyst. That annoyed me, but I thought I would stay at the house until it was paid off.
When I found out last week, the mortgage loan increases with inflation, I felt suicidal. Now had time to think about it, I plan to get a house valuation. A co-worker has recommended a financial advisor their family uses. To remortgage and pay off Catalyst.

So until I get the valuation, I wonder how much my house has increased in value and will I be able to enough mortgage to pay off Catalyst.
I am now 60 years old, have £13000 in savings. 

 When I got the Catalyst mortgage I thought it was for low income, first home buyers. Therefore a cheaper loan. Now I see it is a hugely more expensive loan. Feel devistated and ripped off. 
Any advise on how to deal with this?

MWT

Did you take advice from anyone when you decided to overpay on the repayment part of your mortgage?

Mark_Lion

When I was choosing between 5 or 10 year fixed mortgage, people on this forum about 2 years ago suggested overpayment. 
So last year, when I looked on Martin Lewis mortgage calculator, at the amount I would save, then I overpaid each month.
I did not get the fixed mortgage then get advice to overpay.

MWT

I just went back and read your earlier threads, in the one where you were refunded a significant amount of interest there was also some discussion about having to pay off the equity loan, did that not ring any alarm bells for you?

In the more recent thread about the 5 or 10 year options you didn't mention the equity loan at all so nobody had cause to take that into consideration, but I was actually asking about advice you could rely on, such as from a broker or the lender.

Since it looks like there has been no regulated advice given to you since you took out the mortgage any complaint would have to go back to that time and from the sound of things they did make it clear to you that there was 43.6% of the house value that would still have to be paid for at some point...

In one of your earlier threads you referenced a 'recent' valuation which I think is now 2-3 years old of £280,000. If that is the case then you currently owe at least £122,000 for the equity loan covering the portion of the house you did not originally by, even if there has been no increase since then...

That amount is due either when you sell (assuming it sells for £280,000) or when your repayment mortgage ends, which is why I was concerned about you over-paying on that one...

Mark_Lion

I have completely forgotten about the interest refund in 2015. I do not know why it was refunded, but I say in my own thread, I received it.
My memory is shot.

When deciding on 5 or 10 year fixed Nationwide, I did not think Catalyst would be relevant because it is a different loan, so I did not mention it.
The valuation was done by internet house valuation for renewing house insurance guidence.
I have not had a valuation on the house by a real person.

As you can see, I am not good at finances. 

MWT

Mark_Lion said:

I have completely forgotten about the interest refund in 2015. I do not know why it was refunded, but I say in my own thread, I received it.
My memory is shot.

The refund was because they messed up their paperwork on post-contract communications and didn't include some details that they should have done which prevented them from legally charging interest until they fixed the statements.

It was a windfall refund for a lot of people back then, but it didn't have any impact on the legality and enforceability of the original equity mortgage contract.

It is always good to give people all the details about other loans when asking for opinions as I highly doubt anyone would recommend over-paying on the repayment half of a Help To Buy loan when there was no plan on how to repay the equity portion...

The valuation taken from the internet is fine for rough planning purposes, you might want to do the same again now or look at Zoopla for example...

The actual valuation will probably be less than Zoopla shows for example but probably not by a huge amount, so it at least gives you a clue on current valuation...

Mark_Lion

Zoopla valuation says £298000 to £326000.
Thanks for your replies MWT.

So I think my best option is to get real valuation and financial advisor to arrange a remortgage as much as I can get to pay as much of the Catalyst mortgage off.
The advisor can also tell me how much pension I will get, so that will help to know what I can afford to remortgage.

MWT

You certainly need some good advice right now, if it is an Independent Financial Advisor (IFA) make sure you are clear on what they are charging and also make sure they are familiar with the type of loans you have.

You may find it easier (... and cheaper) to find a Mortgage Broker who is familiar with the products, but will not be able to advise you regarding your pension.

The tricky part of what you have to deal with is that there are two triggers for the repayment of the equity loan, either selling the house or ending the repayment mortgage, so if you plan to remortgage it would have to be enough to take out the equity loan completely...

In any event taking advice is a good thing, and the sooner the better...

ACG

The first bit of this you probably wont like, but the second bit might be a bit more helpful...
It sounds like you thought you were getting a £160k house for £80k and you did not think there was anything unusual about that as you were a first time buyer. Assuming that is the case, I think you need to accept some of the responsibility for where you are. If it sounds too good to be true it usually is. For the record I actually do not like the HTB equity loan which is similar to what you have and have never sold one. I tried to talk my brother out of buying his on the HTB scheme but he was having none of it - he prefers to have the nicer, newer home even if it means he only owns half of it. 

That being said, it might be worth speaking to Jelf to see if you have a valid reason for a complaint. At the very least it sounds as if this was not explained to you properly. You may have made alternative arrangements and been in a better position had you known. The flip side being that you have benefit from the increase in value (albeit half of it), you have lived in a property that is twice the price you would ordinarily have been able to buy and you have presumably paid less than you would have if you had been renting - from that perspective, it is hard to quantify a loss. 

Mark_Lion

Thanks for the reply ACG. I thought I was getting a £175k house for £175k plus interest. I thought the Catalyst loan was the same as the Nationwide loan, with cheaper interest.
I was definately not told this was interest only would have balked if I was told that. 
I think Jelf has been bought by another company, so I presume they will not be willing to do anything. 
I do accept some responsibility for this. Should have asked a lot more questions at the time.

If the financial advisor I will talk to, is unable to get me out of the problem, I will pay off the Nationwide mortgage, then save that amount each month to add to the house sale price in 2034.
I will be retired well before 2034, but will have to work into some of my retirement years.

sammyjammy

Mark_Lion said:

Thanks for the reply ACG. I thought I was getting a £175k house for £175k plus interest. I thought the Catalyst loan was the same as the Nationwide loan, with cheaper interest.
I was definately not told this was interest only would have balked if I was told that. 
I think Jelf has been bought by another company, so I presume they will not be willing to do anything. 
I do accept some responsibility for this. Should have asked a lot more questions at the time.

If the financial advisor I will talk to, is unable to get me out of the problem, I will pay off the Nationwide mortgage, then save that amount each month to add to the house sale price in 2034.
I will be retired well before 2034, but will have to work into some of my retirement years.

From what has been said further up thread you can't do that as the loan will become payable when you repay the Nationwide mortgage.