With the Mis-Sold PPI scandal taking up many of the headlines, other financial difficulties that Britons have faced have been somewhat swept under the rug. With millions of people affected by the mis-selling of Payment Protection Insurance, it has been difficult for other financial scandals to receive any exposure in the media or from governing bodies.
One of the biggest financial scandals that has occurred in the past couple of decades has been the Mis-Selling of mortgages. As large loan agreements that often take part over a large number of years; a mis-sold mortgage can have an incredible effect on the finances of the affected party.
There are a number of different types of mortgages that can be taken out. If your mortgage advisor at the time gave you some bad advice then you might have been mis-sold a mortgage and may be entitled to make a compensation claim. Here are the main types of mortgage, their benefits and their pitfalls.
Interest Only Mortgage
A number of banks have stopped providing the option for interest only mortgages. Probably the most commonly mis-sold of all the mortgages; the interest only mortgage became a liability for lenders and homeowners alike.
The interest only mortgage operates a system wherein the homeowner is expected to only pay back the interest that the mortgage accrues every month. Then at the end of the mortgage term, the homeowner is expected to pay the full capital. The means of funding of this capital is entirely at the discretion of the homeowner.
This mortgage type is particularly desirable to first time buyers who may have little capital at the time of buying a home. However, with no guarantee as to how to pay of the total loan amount, many are left financially crippled at the end of the agreement. People who were sold an interest free mortgage without having a plan as to how to repay the total capital may have been the victim of mis-selling.
The most simple and least risky mortgage type; the repayment mortgage requires the payee to repay a fix amount of the debt as well as the interest every month. The repayment mortgage however may not have been the most beneficial financial decision to undertake at the time. If a mortgage advisor neglected to offer potentially more fruitful loan options, then they may be guilty of mis-selling a mortgage.
Incorporating an endowment policy to provide life insurance and save funds to repay the loan when the agreement finishes; endowment mortgage were heavily marketed in the 1980s. However, the investments often performed badly leading to the customer suffering a financial shortfall.
If those sold the endowment mortgage were not made aware of the risks then they may have been mis-sold a mortgage.
Connected Claims specialise in helping companies make claims against banks and lenders for a wide range of financial misdemeanours including mis-sold Payment Protection Insurance and mortgages.