Bolier Maintenance Plan - MISSOLD

ZarZar_2

I took out a Boiler Maintenance Plan with (what was then) Hometree, in August 2022. It was subsequently taken over/changed to BeWarm.

The contract I electronically signed, Did Not advise me clearly what I was taking out. I understood that I would be taking a Loan for the cost of the boiler, and my monthly payment (which increases by 3.99% Annually) was for ongoing Services/Maintenance in addition to paying off the loan. The term is for 12 years.

I understood this, but nowhere in the Contract does it say that I would be paying a minute amount off the total cost of the loan.

I recently used the Loan Eligibility Checker to see if I could get a loan, and was most upset to see that over the 30 months I have had the plan, my Loan of (started off at) £2,461 has only reduced by £82, so I still have an outstanding amount of £2,379.!

This has a negative impact on my Credit Score, as it appears that I still have that amount outstanding, when I was under the impression that the monthly amount was paying off the loan and included an amount for the maintenance company.

I feel I have been totally mislead and misinformed and would not have taken it out had I know this was going to affect my credit score for 12 years!!

I have contacted the company BeWarm for a full breakdown of how my monthly payment is being attributed, but I have not had a response from them and when I called them to discuss, their stock answer was "it tells you in the contract how much it will reduce by each year" and if you have an issue you have to email us. It is not made clear in the contract that the loan amount will remain in such a detrimental way on my credit file, and that such a minuscule amount will be deducted from the loan each month.

Any advice for a very disgruntled customer?

Mark_d

So you took out a boiler maintenance plan as well as a loan for your boiler?  There's nothing wrong with that.  Boilers are expensive and also need servicing each year.

For a standard loan, in the initial months your payment is mostly made up of interest with only a small amount of capital repayment.  In the later months, the interest amount is lower and most of your monthly payment goes towards repaying the capital.

If you are concerned about the  loan being on your credit file for 12 years, you can look in to making overpayments or even repaying the entire loan early.

TheSpectator

Cancel the maintenance and get a standalone product if you feel you need it.

How much is the service/maintenance element currently? 

How much is your total monthly payment?

CliveOfIndia

ZarZar_2 said:

I understood that I would be taking a Loan for the cost of the boiler, and my monthly payment (which increases by 3.99% Annually) was for ongoing Services/Maintenance in addition to paying off the loan. The term is for 12 years.

I understood this, but nowhere in the Contract does it say that I would be paying a minute amount off the total cost of the loan.

I recently used the Loan Eligibility Checker to see if I could get a loan, and was most upset to see that over the 30 months I have had the plan, my Loan of (started off at) £2,461 has only reduced by £82, so I still have an outstanding amount of £2,379.!

A loan for the relatively small amount of £2461, spread over 12 years, will inevitably mean that each month you're only going to be repaying a tiny amount of the capital each month.  Especially if you've got to factor in the cost of the ongoing service/maintenance agreement, as well as interest.

Check the terms of your contract, see what the APR is and what the maintenance charges are, and it'll be pretty simple to work out how much of your monthly payments go towards interest, how much towards service charges and how much towards capital repayment.

ZarZar_2 said:

This has a negative impact on my Credit Score, as it appears that I still have that amount outstanding, when I was under the impression that the monthly amount was paying off the loan and included an amount for the maintenance company.

Don't worry about your credit score as it means nothing.  When a lender looks at your file they won't see the meaningless score, but they will see that you have a debt of £2379, or whatever is left at the point that they search your file.  This will be factored into affordability calculations - but on the flip side, the fact that you've been meeting your contractual monthly payments will reflect positively on your credit history.

Your monthly payment does include an element of capital repayment - just a very small amount.

km1500

why do you think you have been missold?

in 12 years time you will have paid off the boiler as you expected.

MWT

ZarZar_2 said:

The contract I electronically signed, Did Not advise me clearly what I was taking out. I understood that I would be taking a Loan for the cost of the boiler, and my monthly payment (which increases by 3.99% Annually) was for ongoing Services/Maintenance in addition to paying off the loan. The term is for 12 years.


I feel I have been totally mislead and misinformed and would not have taken it out had I know this was going to affect my credit score for 12 years!!

You took out a loan with a 12 year repayment term, so it was always going to have an impact on your credit file for 12 years.

Your only grounds for complaint would be if the loan was not fully repaid after making the payments for 12 years.

It is not unusual for the capital component of the repayments to be small in the early years and it rises naturally as the interest falls due to the reduction in the outstanding loan balance until the majority of the capital is repaid in the last few years of the loan period.

I would expect there to be two parts that make up your monthly payment, the loan repayment which should be based on the interest rate agreed for the loan and the initial capital amount (£2461?), the second part being the maintenance contract which is the part that I would expect to have an annual increase (3.99%?).

I would not have expected the total payment to increase by 3.99% annually though, but if you can give us more detail from your contract it should be possible to calculate if the balance is accurate...

Scot_39

Miss sold or simply misunderstood ?

You have taken out a complex deal to cover boiler cost and maintenance.

And based on Hometree site linked below - the current Heating plan max of 12 years - and with an agreed escalation rate - 4% or inflation is the site wording now - to cover the projected increase costs of the latter.

Edit 1 "That essentially means that the costs over the 12 years is likely to be dominated not by the boiler itself - but the maintenance/service plan - in £100s per year - with indexing.  See ex from their current site below"

Did you read and understand the full terms and conditions before agreeing ?

Is it going to fail to pay off your boiler and provide maintenance cover for the specified duration ?  Unless it fails to do so - you haven't really been missold anything in the strictest sense.

But that doesn't mean the contract was fair or appropriate for a typical domestic consumer to understand - which could in theory be tested in court.  But it could be expensive to do so would be my guess.  

Edit 2 But a chat with an organization like Citizens advice might be worth while to see if they can help you on the basis and any other way out.

What was the actual boiler cost.  Was that the £2461 ?  Site link below currently quote from £2500.

But you then probably didn't buy your boiler on conventional finance by the sounds of things - but more likely you bought their plan deal.  Or variant of the current if different.

You may not have been aware of it, but gas plans for Service and maintenance costs £100s per annum - BG basic service boiler only and with £60 callout excess £19pm.  Probably 1st year discounted. 

Looking at Hometree website - basic boiler cover  is from c£13pm but that headline hides behind a £95 excess but if drop that excess to zero which it appears to be on the plan - a much higher £22.90pm and the cost of a12 yr Heating Plan is from c£35pm.

So maintainence/service  on that price basis takes the boiler cover to nearly 2/3rds of monthly payment.

And it will be that part of the deal in particular  - as well as front loaded interest mix as  pointed out above - eating up the majority of your payments in the early years - that leaves a high oustanding debt.

But you could always pay it off now to clear credit score - you do realise at least according to their site you were going to have to potentially anyway - e.g. if moving according to the footnote details here

https://hometreefinance.co.uk/boilers/heating-plan

" You can end your plan at any time by paying the lump sum outlined in your contract(*). This will be required if you sell your property. "

I haven't read the contract T&Cs but that website current Homeplan description - admittedly might be different from when you signed up - seems pretty clear on the basics of the deal you were entering into.  But curiously unlike a standard loan site shows no interest rate for loan component if so of the plan  - but it also refers to leasing options or finance on other parts of their site.

(*) Have you checked your plan for what it says regarding early termination costs and repayments.