If you believe that your mortgage was mis-sold, you might want to claim compensation. Claiming compensation can help make amends for the financial losses you’ve suffered.
To claim compensation for a mis-sold mortgage, you first must prove that you were a victim of mis-selling. It’s not enough to show that your mortgage isn’t working how you’d hoped. You must show that the lender, or broker, deceived you or withheld important details at the start.
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Circumstances change, and the mortgage you took out might not be the most suitable forever. A change in your situation or income or expenditure can make it harder to keep paying the bills. This doesn’t mean that your mortgage was mis-sold when you first bought your house.
Your mortgage may have been mis-sold if your lender or broker didn’t check you could afford it in the first place. It also might have been mis-sold if the risks weren’t explained, or you weren’t made aware of broker fees that were added to your mortgage.
Before a lender or broker offers you a mortgage, they should make sure the product is suitable. This includes doing an assessment of your budget and your spare money each month. If this assessment isn’t thorough, you could be committing to ongoing monthly payments that you can’t afford.
If you didn’t fully understand a mortgage product, the lender or broker should have taken the time to make sure you knew what you were getting into. If you didn’t know and appreciate the risks, your mortgage may have been mis-sold. It might also have been mis-sold if there were fees and charges that you weren’t made fully aware of – particularly if your broker fees were hidden within your mortgage capital, adding to your debt and the interest you were charged every month.
Endowment mortgages are considered to be one of the biggest mis-selling scandals. These mortgages have caused a lot of trouble because of the way they were set up.
Many people that took out endowment mortgages were assured that they’d be successful. The risks were minimised, and benefits oversold to make it sound like borrowers would have an easy time with their mortgage.
Endowment mortgages are attached to investment savings products. The original idea was that investments would grow throughout the interest-only mortgage term. Borrowers could enjoy low monthly repayments, simply clearing the interest every month, and at the end of the mortgage, could cash in their investments and use these to repay the capital. Sadly, over time it became very clear that investments weren’t growing enough.
There are time limits for claiming compensation if you think your mortgage was mis-sold. In most cases, claims must be made within six years of the mortgage start date.
It’s accepted that some people don’t realise straight away that their mortgage has been mis-sold. In these situations, you’re given three years from the day that you became aware. Some people don’t realise until the end of their mortgage term that their mortgage was mis-sold, so this three year grace period can help you to claim if you’ve discovered a problem later on.
You should start your claim as soon as possible. Claiming compensation can take time, and you don’t want to go past your deadline.
With endowment mortgages, many people have already missed the deadline for claiming. When it became obvious that these mortgages weren’t working, regulators asked lenders to send colour-coded letters to make their customers aware. Customers received a red-letter if their endowment investments were failing them. Orange letters were for people that were still at risk but not in immediate trouble. Green letters were a good sign, suggesting that investments were growing at a rate that would completely repay the debt.
If you have an endowment mortgage, you should have already received a letter to tell you how your investments are doing. Unfortunately, this letter is considered to be the moment you were made aware your mortgage was mis-sold. This letter should have highlighted the problems with your mortgage, and you should have acted at this point. Of course, many customers weren’t aware that they could have claimed compensation.
Your three-year deadline started ticking down when your colour-coded letter was received. If it’s been three years since this letter reached you, your compensation claim won’t be successful.
If you’re still within your time limit for claiming compensation, it’s important to act as soon as possible. Compensation claims aren’t instant, and yours needs to be complete by the deadline. Starting before the deadline isn’t enough because your claim needs to have been finalised by the end date.
You can use a solicitor to help claim compensation, but if you’d prefer to claim on your own there are just a few simple steps to follow:
First, find out who’s responsible for your mortgage being mis-sold. Were you dealing directly with the lender, or was there a broker involved?
Check your mortgage paperwork. This can help you to find out how financial transactions were managed.
For your claim to be successful, you’ll need as much evidence as possible. Check all your paperwork for signs that your mortgage was mis-sold. If your paperwork doesn’t clearly show broker fees, this could be a sign of mis-selling.
If your paperwork doesn’t make your risks completely clear, or if there’s no sign of any budget assessment, this could be evidence that your mortgage was sold without you being aware of those risks initially.
Once you’ve gathered your evidence and you’re feeling confident that your mortgage was mis-sold, you should write a letter and send it to the lender or broker. They have up to eight weeks to reply with a satisfactory response.
If you don’t get a response from the lender or broker, or if you don’t think that the response was good enough, you can complain to the Financial Ombudsman. As a free and impartial service, the Financial Ombudsman will investigate on your behalf. If you’re entitled to compensation, the Financial Ombudsman will help you get it.
Here at Money Savings Advice, we have partnered with one of the UK’s leading Compensation claims specialist, and they have already helped thousands of our readers get the compensation they deserve for mis-sold endowment mortgages.
Choosing an independent adviser means they won’t recommend a scheme unless they are sure it is in your best interests. Their advice is also regulated by the FCA, which gives you an additional layer of protection.
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