If you received inadequate advice from an advisor when taking out an interest-only mortgage, you may have grounds for complaint. You may be wondering ‘was my mortgage mis-sold?’ and we have the answer.
A mortgage could be mis-sold due to a number of reasons. These include:
- The mortgage term ending after your retirement date
- You weren’t aware of the level of commission the lender would receive
- The advisor encouraged you to self-certify or overstate your income in order to borrow more
- You were advised to switch lenders without being made aware of the fees and penalties involved
- An advisor offered a fixed-rate mortgage and later told to remortgage to a better deal without being made aware of the penalties for leaving a fixed-rate mortgage early
- You were advised to take out an interest-only mortgage without a clear repayment plan, or understanding of the other options available
- An advisor told you to to take out an investment designed to pay off your mortgage when it finished, and later discover that you would not be paid out enough
The interest-only mortgage could become the next mis-selling scandal. This financial product allows the borrower to pay just the interest on a mortgage over a fixed term. When the loan matures, they are then expected to pay the lump sum of the initial amount.
Borrowers are expected to have a payment plan in place to save enough to cover this lump sum. However, one in ten may not have the means to pay off this sum. This can result in disastrous financial consequences for the borrower.
The Financial Conduct Authority (FCA) has already cracked down on these mortgage types. 600,000 of these loans are expected to mature before 2020. This could leave some borrowers with very few options when it comes to paying off the sum. Many will remortgage, though those who have since retired or do not have a high enough income may struggle to secure a new financial agreement.
Borrowers who weren’t fully informed about the requirements of their interest-only mortgage, or who didn’t have clear information about the other options available, could have been mis-sold and should seek advice to secure compensation.
Finally, were you not informed of a high level of commission your advisor received from the lender? You may also be entitled to compensation under the Plevin ruling. The Plevin ruling states that high commission levels could have resulted in an unfair relationship. Read more about Plevin in our dedicated blog.
Do you feel that you’re been a victim of mis-selling? Our expert team can offer support and advice on seeking redress.