Buying your own home is one of the most exciting things that you can do – being handed the keys to your new property is such a unique, happy feeling, and one you are unlikely to forget.
At the same time, you will be taking on a substantial debt which will be present for most, if not all, of your working life.
For this reason it’s imperative that you buy the correct mortgage for you and your situation, and as long as you are honest in your application, there’s no reason why everything should go smoothly.
However in some instances, you may feel that you have been mis-sold a mortgage, and if that is the case there are some steps that you can take, and you may be entitled to compensation.
What Is A Mis-Sold Mortgage?
A mis-sold mortgage is when you have been sold a product that is not right for your lifestyle and your circumstances.
An easier way to think about it, is if you were to go and buy a car, and you spoke to the salesman and told them you had to have a car with cruise control, but when you paid and picked up the car it didn’t have cruise control, then that car would have been mis-sold to you. This is a very simplistic way of looking at it, but that is mis-selling, and anything can be mis-sold, including a mortgage.
When you are discussing your mortgage needs with your mortgage advisor or financial broker, they should take this all into account, and find a product that suits all your needs. This product should be explained in full to you, and they should be sure that you understand exactly what you are buying.
You should also be made fully aware of the risks of the mortgage. Even with the best intentions, not every financial investment is safe, and if this happens, that is not the mortgage broker’s fault, however if they did not inform you of the risks and ensured you understood them, then that would count as mis-selling.
What Counts As A Mis-Sold Mortgage?
There are a variety of ways in which a mortgage can be resold to you, and there are many mis-sold mortgage experts available that can take an in-depth look at your case and let you know if you’re entitled to a claim or compensation.
There are many examples of a mis-sold mortgage. These include, but are not limited to, interest only mortgages, a mortgage that will end after your retirement age, you were advised by the financial advisor to borrow money or overstate your income so that you could borrow a larger mortgage, you were not told that the financial advisor would receive commission, or you were not told about any fees or penalties you may incur.
Interest Only Mortgages
Interest only mortgages are exactly what they sound like, your monthly repayments will only cover the intestate on the debt that you have. This means that at the end of your mortgage period, whether that be twenty, twenty five or thirty years, you will need to pay off the debt in full.
Interest only mortgages can seem attractive, because the monthly repayment is a lot lower, but, you must be able to pay the full amount at the end of the term.
Interest only mortgages are the right choice for some people, so if you have one, it does not therefore mean that you have been mis-sold, but you may have been mis-sold if your financial advisor did not fully explain what an interest only mortgage is, and the risks involved in having one.
Past Retirement Mortgages
If your mortgage ends after your retirement date, then again, this does not automatically mean that you have been mis-sold.
As long as your financial advisor has taken into account that once you are retired and you no longer have a regular wage coming in, that you will be able to continue your regular mortgage payments.
If you paid higher fees than you expected, or received a penalty fine for changing lenders and were not told about them, this could be mis-selling.
The same goes if your advisor did not inform you that they would receive commission on the product they sold you.
You should always be fully informed of any fees of penalties, and if you were not told then that could be a mis-selling.
All brokers will get commission on any product they sell, so the fact that they do get commission is not an automatic mis-sell, it becomes a mis-selling if they received a higher than average commission which means they are really pushing a particular product, and don’t tell you why they want you to choose that one.
What Do You Do?
If you think that you have been mis-sold a mortgage, do not wait to investigate it. In some cases, the mortgage can’t be investigated after a certain amount of time a has passed.
It’s also worth being aware that you do not necessarily have to have been financially impacted to be able to claim for a mis-sold mortgage.
In the first instance, talk to the company that you believe has mis-sold you the mortgage. You do not need to have exact proof, but explain to them why you believe you have been mis-sold, and present them with any paperwork that you think is relevant.
Make a formal complaint to the company, they should be able to guide you on how their complaint system works.
You can take your complaint to the financial ombudsman if the company does not reply to you within eight weeks, or you have six months to contact the ombudsman if you are unhappy with the outcome of the complaint.
If you are unhappy with the decision of the ombudsman, then you can consider if you want to take your case to court. This is, of course, costly but it can be done. Usually, the final decision lays with the ombudsman.