Mortgage broker messed up

jones_guitar

Also, can I be honest, why didn't you switch internally? When the broker told you it was the same lender, you can ditch the broker and ask for a refund. Your story is similar to mine.

I highlighted, you cannot always remortgage to the same bank. It sounds like they put a full mortgage application in? You can't do this because you need to switch internally. Sounds silly, but you need to remortgage to a different bank.

If you really want my advice, winning a case because mortgage rates went up I believe is very difficult. I personally think you might need to accept some compensation.

You'll be given a chance to have a second responce at the broker level. From my experience, I'd accept it.

kingstreet

You also need to compare the remaining balance at the end of the replacement product with the remaining balance of the recommended product. Usually, a higher rate results in a higher outstanding balance.

penners324

Why do you need to wait until the 1st May? Most lenders will do a product switch straight away

anticlaus105

Thank you everyone for the advice so far. To update: they came back with an offer fairly quickly, but the calculation is based on 24 months even though the product runs for 29 months. They’ve also only used the difference in monthly repayments, which means they haven’t accounted for the higher remaining balance at the end of the term or the total additional interest charged over the full period. I emailed them two weeks ago setting out these concerns, but aside from an acknowledgement I haven’t had any further response.

I plan to go back to them with my own calculations, but if they don’t come back with a revised offer then the next step will be either taking it to the FOS or considering legal action.

Their only letter didn't specify "final response". It did say "I do hope that you will feel able to accept this in full and final settlement". It also says "Alternatively, if you are not satisfied with the way this complaint has been handled, you have the right to complain to the Financial Ombudsman Service, free of charge –but you must do so within six months of the date of this letter"

Would this class as a final response letter?

ACG

They have offered you about 90% of what you want… You will get the final remaining bits - although the 29 months would be on the assumption you completed on day 1. They might try to negotiate that bit on the assumption it would have taken you a month or 2 to complete maybe? - Just a thought and playing devils advocate, I dont know the full details on the dates so could be wrong here.

From what you have said and their response it sounds like they have messed up, they know they have and they are trying to put it right.

I think if I were in your shoes, I would just let it play out. I think you will be fine.

There is an argument that they only have to put you in the position you would have been. Giving you 2 years worth of payments upfront has its own value so again they might offer a slightly lower amount to pay it all in one go. But again, its a negotiation at this stage.

No that isnt a final response. It would say "this is our final response, if you are unhappy you can can take this to the FOS".

anticlaus105

They’ve finally come back to me. They’ve accepted that they used the wrong term in their calculation and have now used 28 months instead of 24.

However, they’ve also stated the following:

“Firstly, while I appreciate your concerns around the inclusion of capital erosion or our lack thereof, I must explain that when calculating the total cost of a mortgage, we do so based on the rules set out by our regulator, the Financial Conduct Authority (FCA). They calculate the total cost of a mortgage product based on the aggregated monthly payments under each contract over the relevant period and also including any relevant fees.”

In other words, they are refusing to consider the increased balance at the end of the product term, and they are refusing to calculate the loss based on the total extra interest charged. Instead, they are sticking to the difference in monthly payments only, which does not put us back in the position we would have been in had they not made the error. I find it very difficult to believe that this approach is something the FCA would endorse as fair redress.

The difference in the remaining balance at the end of the term is almost £1,000. They are offering £200 for distress and inconvenience, meaning their offer is still around £800 short of our actual financial loss.

I’m extremely disappointed that they’ve taken this stance, and I’m now considering my next steps.

I would like to understand whether the FCA, and therefore the Financial Ombudsman Service, really calculate loss without considering the difference in the remaining balance (or put another way, by using only the difference in monthly payments rather than the total extra interest cost).

What’s also interesting is that the broker did use the difference in interest for the month we were on SVR. If their position is that only payment differences matter, why did they not use the difference in monthly payments for that month, which was significantly lower?

If I decide to take this further, I’m unsure whether it would be better to escalate to the FOS or to engage a solicitor. And if I did engage a solicitor, would those legal costs be recoverable?

Once again, thank you for everyone’s assistance.