Mis-Sold a Mortgages: What They Are and How to Deal With Them

When it comes to making one of the largest purchases of your life, it is important to make sure you receive the best advice and guidance when buying a home. Unfortunately, many people end up being mis-sold mortgages, resulting in financial losses. What happens if you’ve been mis-sold a mortgage?

If you have been mis-sold a mortgage, you can file a claim for compensation from the financial company. You can start by contacting the institution that sold you the mortgage, submitting any necessary paperwork and providing evidence of your complaint. Depending on the severity and nature of your issue, customers may be able to receive reimbursements for fees or other costs incurred due to negligence.

From interest-only mortgages to commission payments and unsuitable terms, this article will explore what constitutes a mis-sold mortgage and how to avoid becoming a victim of such an injustice. Get ready for an enlightening journey as we uncover the truth behind mis-sold mortgages – and learn how to protect yourself from falling prey to these schemes!

What is a Mortgage?

A mortgage is a long-term loan that allows you to borrow money from a lender, such as a bank or building society, to purchase property.

The loan is secured against the property, meaning that should you fail to keep up with repayments the lender can repossess it.

Mortgages are typically paid off over 25 years or more, and the amount of interest charged on your loan will depend on the type of product you choose.

Mortgage products vary greatly and include fixed-rate mortgages (where your interest rate stays the same throughout the term), variable-rate mortgages (where rates may change depending on market conditions) and tracker mortgages (which follow Bank of England base rates).

It’s important to find the right mortgage for your individual circumstances – speak to an independent financial adviser if you’re unsure which product best suits your needs.

A mortgage is a huge financial commitment, so it’s important to do your research and make sure you’re getting the right one for your individual needs. But what happens if you’ve been mis-sold a mortgage? 

What Is a Mis-Sold Mortgage?

Before you learn what to do if you’re a victim of mis-selling, let’s define what exactly a mis-sold mortgage is.

If your mortgage provider or lender failed to do any of the following, they may be guilty of subverting the FCA’s guidelines:

  • Thoroughly evaluated your circumstance
  • Clearly outlined all of your available options
  • Provided a recommendation that suited your personal situation

The Financial Conduct Authority (FCA) is the regulatory body for lenders and mortgage advisors. They set out the rules associated with mortgage advice given to customers.

However, despite the FCA’s guidelines, financial advisors and lenders don’t always offer the right advice, which results in some customers being unable to keep up with mortgage repayments. 

Mortgage mis-selling happens when a mortgage advisor or broker does not provide you with the appropriate advice for your individual needs. It can include advising you to take out an unsuitable mortgage product, providing incorrect information about the terms of the mortgage, or failing to explain the full extent of the risks involved.

In some cases, it can even involve taking commission payments from lenders in exchange for recommending their products – this is illegal and is known as “tied selling”.

If you believe that you have been mis-sold a mortgage, it’s important to act quickly – there are time limits in place for making a claim. You may be able to get back part of your monthly repayments or other costs associated with taking out a loan that was not suitable for your personal circumstances.

The vast majority of people who seek financial advice receive proper advice and are happy with their mortgages – however, if you feel as though yours has been mis-sold it’s important to take action as soon as possible. Speak to an independent financial adviser if you think this could be the case for you.

Examples of Mortgage Mis-Selling

We’ve outlined several common scenarios when a mortgage was mis-sold. If any of these sound familiar, you may have been mis-sold a mortgage:

Interest-only Mortgages

Interest-only mortgages are becoming increasingly popular, but it’s important to understand how they work before taking one out.

An interest-only mortgage is a loan in which the borrower only pays back the interest that accrues on the loan each month – there is no repayment of the capital amount borrowed.

This means that your monthly payments will be lower than with a standard mortgage, and you can save money for other investments or goals.

However, it’s important to bear in mind that at the end of your mortgage term you’ll still need to pay back the full capital amount borrowed – so you should ensure you have made adequate savings plans to cover this cost.

Also, as there is no repayment of capital each month, interest-only mortgages can be risky and may not be suitable for everyone, particularly those who do not have enough money saved up to pay off their loan when it comes due.

If you’re considering taking out an interest-only mortgage, speak with an independent financial adviser first to ensure that it’s right for your individual circumstances.

Interest-only mortgages can be a great way to save money on monthly payments and can help you reach your financial goals faster, but they also come with some risks.

Before taking out such a loan, it’s important to understand exactly how they work and ensure they are suitable for your individual circumstances. 

If you were paying only monthly interest on a mortgage and your adviser failed to inform you how to repay the mortgage, you may be entitled to make a claim.

If the lender or broker did not outline the costs of a Capital and Repayment mortgage in comparison to the lower costs of an interest-only mortgage, it’s highly likely you were a victim of mis-selling.

Debt Clearance Remortgaging

Debt Clearance Remortgaging is a type of mortgage product that allows borrowers to clear existing debts with the proceeds of their new loan. This can include credit cards and other types of unsecured debt, as well as secured loans such as car finance.

Debt clearance remortgaging can be a great way to reduce interest payments, save money and simplify your finances by consolidating several payments into one. However, it’s important to understand the risks involved before taking out this type of loan.

It’s important to ensure that you have adequate explanation from your lender about the terms and conditions of taking out this type of loan – this includes understanding exactly how much you will need to pay back each month, and any potential penalties that may be associated with early repayment or missed payments.

Did your lender tell you that it might be better to consolidate all of your debts into your mortgage? Although you may have been told that you might initially experience a reduction in monthly outgoings, were you informed that the length of your interest might increase?

If not, a claims company can help you seek compensation for this such “sleight” of mortgage selling.

Analysis of Household Finances

 You may have unknowingly committed to a mortgage that you’re finding hard to repay, particularly if your lender or adviser failed to carry out a household analysis an analysis of your monthly income and expenditure.

Again, this is a prime example of mortgage mis-selling. We show you what you should do if you think were mis-sold a mortgage below.

Take Out an Investment

If your adviser told you to take out an investment to pay off your mortgage , but the payment was ultimately insufficient, consider yourself mis-sold.

Fast-Track Mortgage Policy without Evidence

If you were encouraged to take out a “Self Cert” or “Fast-Track” mortgage without being asked for evidence of your income, you may have been mis-sold your mortgage!

Brokers earned high commissions from many mortgage products, so, like PPI the biggest financial scandal in recent years they were sold prevalently.

Mortgage Repayments after Retirement

You could be a victim of a mis-sold mortgage if your adviser didn’t take into account your ability to keep up with repayments after you retire.

Did the adviser discuss how you could repay the mortgage for a specific number of years after your retirement? If not, you could be entitled to make a claim.

Unreasonable Broker Fees

You may be entitled to compensation for a mis-sold policy if broker fees were “discreetly” added to your mortgage or were unreasonably high. If you weren’t told about these fees, you have a strong case of being a victim of a mis-sold mortgage!

How to Avoid Being Mis-sold an Interest-only Mortgage

If you’re considering taking out an interest-only mortgage, it’s important to ensure that you get the right advice and are not mis-sold a product. Here are some tips to help you avoid being mis-sold:

First and foremost, make sure you understand all the terms of the loan before signing on the dotted line. Ask your mortgage advisor to explain exactly what the interest rate is, how long the mortgage term is, and what the monthly repayments will be.

Next, check that they have taken into account your individual circumstances when recommending a suitable mortgage product – ask them to explain why this particular solution fits your needs best. Don’t forget to find out if there are any commission payments involved – if so, make sure these haven’t influenced their advice.

Finally, ensure that your advisor has given you an adequate explanation of all potential risks associated with taking out an interest-only mortgage. The vast majority of financial advisors are reputable and provide proper advice – but it pays to be vigilant!

How to Ensure You Receive Proper Advice from Your Adviser or Broker

When it comes to buying a home, it’s essential to make sure you receive proper advice from your mortgage advisor or broker. Many people don’t realise that the vast majority of mortgage advisors and brokers are paid on commission by the provider, which can influence their advice.

To ensure you get the best advice for your personal circumstances, ask questions about their experience and qualifications, as well as how much they will be paid if you take out one of their products. You should also check that your advisor explains all aspects of the mortgage in detail, including the term length, repayment type and any fees associated with taking out a mortgage.

It’s also important to make sure you have an adequate explanation of why they recommend one product over another – this could be due to the interest rate or other factors such as flexibility or choice. Don’t be afraid to seek further advice if you’re unsure about anything; a good advisor will understand that this is a big decision for you and will be happy to answer any questions.

Finally, remember that although an adviser or broker can help guide you through the process of buying a home, ultimately it is up to you to make sure that the mortgage chosen is suitable for your needs and circumstances.

What Can You Do if You Were Mis-Sold a Mortgage?

It can be quite daunting to discover you’re a victim of a mis-sold mortgage. Whether you know this as a matter of fact or not, you should seek the services of a claims management company to help you learn the extent of your policy mistreatment.

A specialist claims management company or legal advisor will thoroughly investigate your claim, but make sure to provide as much detail as possible about how you think you’ve been mis-sold, including how your mortgage provider or lender failed to discuss vital information or provide you with the required documents.

When considering a claims company to work with, it’s important to ensure they’re a credible business capable of processing your claim efficiently approach those that use a powerful claims management software and have trusted and successful track records. Once you have evidence of being a victim of mortgage mis-selling, you can easily make a claim and retrieve what’s rightfully yours!

Who Can Make A Claim for Mis-sold Mortgages?

Getting mis-sold a mortgage can be a costly mistake, but luckily, if you think you have been a victim of mis-selling, there are steps you can take to seek redress. Anyone can make a claim for mis-sold mortgages – whether you’re an individual or a business.

If your adviser or broker failed to provide adequate explanation about the product or did not offer proper advice based on your personal circumstances, then you may be able to claim compensation for any losses incurred as a result of the mis-selling. This includes cases where commission payments were received by advisors for recommending unsuitable mortgages and products that had higher monthly repayments than necessary.

The vast majority of financial advisers and mortgage brokers do act in their clients’ best interests, however it is important to remember that if you think you have been mis-sold a mortgage then taking action sooner rather than later is key. Speak with an experienced financial advisor who will be able to assess your situation and provide guidance on whether making a claim would be suitable in your case.

How To Make A Claim For Mis-sold Mortgages

Making a claim for mis-sold mortgages can be a confusing process, but it is important to take action sooner rather than later if you think you are in this situation. Firstly, speak with an experienced financial advisor who will be able to assess your individual circumstances and provide guidance on whether making a claim would be suitable.

You should then gather as much evidence as possible to support your case – such as emails and letters from the mortgage provider or broker outlining the terms of the agreement and any other relevant information. It is also worth keeping track of the time limit applicable to make a claim, which is usually between six months and two years depending on when the mis-selling occurred.

Finally, you will need to contact either the Financial Ombudsman Service or the Financial Services Compensation Scheme (FSCS) and explain your claim in detail. They will then investigate further, so it’s important that you are clear about why you believe you have been mis-sold a mortgage. Being prepared and having all relevant information at hand can help make this process go smoother.

Sources

https://www.which.co.uk/money/mortgages-and-property/mortgages/types-of-mortgage/repayment-mortgages-explained-atwsx8v4sjhg

https://www.theguardian.com/business/2011/may/05/how-ppi-scandal-unfolded

https://www.logican.co.uk/claims-management-software/

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