CLAIM AGAINST MORTGAGES
If you think that you have been overpaying on your mortgage, then you may have a claim against your mortgage provider such as Lloyds, Bank of Scotland, Halifax, Santander, Barclays, NatWest or any other UK bank or building society. Many individuals and businesses are being driven into debt or financial difficulty because their bank or building society are making them pay high mortgage rates. These higher rates are tied to the mortgage providers’ Standard Variable Rate (SVR) or “follow-on” rate, which is typically much higher than the interest rate on a fixed rate mortgage. SVRs are applied when a borrowers’ existing fixed rate, tracker rate or discounted rate period ends.
Rather than helping their customers transfer to new lower rate deals, some mortgage providers are being accused of hiding behind industry ‘lending rules’ as a way to keep borrowers on high rates; thereby squeezing more profit from these longstanding, loyal or financially vulnerable customers.
However, mortgage providers also have a requirement to treat their customers fairly. By not allowing customers to transfer their mortgage to a lower fixed rate deal, they may not be acting in the customers’ best interests and therefore breaching rules protecting the fair treatment of customers* – this may be despite the customer not passing the mortgage providers’ own affordability assessment. This creates the perverse situation whereby borrowers that fail the affordability assessment are kept on a high SVR. In other words, those less likely to afford a mortgage are required to make higher monthly mortgage payments. So rather than helping their customers, some mortgage providers are actually making their customers financial situation worse.
HAVE YOU BEEN REFUSED AN APPLICATION TO TRANSFER YOUR MORTGAGE TO A LOWER FIXED RATE?
WHY ARE FIXED RATE MORTGAGES BENEFICIAL?
Fixed Rate mortgages tend to follow the Bank of England’s base rate. As base rates are currently at historical lows (o.25%), this is resulting in some very cheap and competitively priced fixed rate mortgage deals. However, mortgage providers’ SVRs have generally not followed this downward trend but remained relatively flat or even slightly increased. Rather than following the direction of base rates, the SVR is set at the discretion of the mortgage provider and can also be changed at their will with little notice. For example the current Standard Variable Rate for Halifax Mortgages is 3.74%, some 3.49% above the Bank of England’s base rate.
WHAT IS A "MORTGAGE PRISONER"?
A mortgage prisoner is someone who wants to switch or remortage to a new deal but are told by their mortgage provider that they are unable to do so, thereby getting ‘trapped’ onto the mortgage providers’ Standard Variable Rate (SVR). When applying for a mortgage switch or remortgage, the mortgage prisoner may have failed an affordability assessment set by the mortgage provider which is then used to justify the decision to decline the switch request. In which case, the borrower would not be able to transfer their mortgage to a lower fixed rate mortgage deal.
In 2014, new mortgage affordability rules were introduced under the Mortgage Market Review (MMR) which imposed stricter lending criteria. As a result, many borrowers failed the affordability test. This created a perverse situation whereby borrowers were told that they could not afford the mortgage payments on a lower fixed rate mortgage that they had applied for, but rather were rolled onto the mortgage providers’ higher SVR product – in some cases, doubling the monthly mortgage payments.
Borrowers that most likely failed the affordability test and became mortgage prisoners included those who:
- Were self-employed or contractor worker
- Took out self-certified mortgages
- Took out interest only mortgages
- Had fallen behind on mortgage payments and suffered arrears
- Had ran up debts elsewhere on other loans and credit cards
- Had entered into a debt management program
- Had experienced credit problems since purchasing the property
- Had experienced low or negative equity on their property
- Your mortgage continues into your retirement
- You get paid some of your salary in a foreign currency or were an ex-pat
If you have tried to switch or remortgage but failed the affordability test, or were simply told that you did not qualify for a new deal; then you may have a claim against your mortgage provider. Your mortgage provider should have treated each switch or remortgage application fairly and should also have acted in your best interests. If you feel that this was not the case, please call us on 0800 170 0616 to see if we can help.
IT HAS BEEN ESTIMATED THAT THERE ARE 10,00,000 MORTGAGE PRISONERS ACROSS THE UK.** ARE YOU ONE?
HOW DO I KNOW IF I AM A "MORTGAGE PRISONER"?
If you have applied for a remortgage and were turned down, were you given any of the following reasons by your mortgage provider?
- You were incorrectly told that you needed to pass an affordability check to switch deals
- You were incorrectly told that you were not eligible to switch your mortgage
- Your mortgage provider undertook an affordability check when it was never required
- Your mortgage provider failed to undertake an affordability check when it was required
- Your mortgage provider insisted that you had to switch from an interest only mortgage to a repayment mortgage in order to proceed with the remortage.
It may be that you wanted to switch mortgage rates and you were told by your mortgage provider that you had to undertake an affordability test. However, this is not always a requirement; especially if you took your mortgage out before April 2014 and were not borrowing any more.
HOW MUCH COULD I CLAIM BACK?
If you have been treated unfairly by your mortgage provider, then you could have a valid claim for financial compensation. In fact, you could be paid a lump sum made up from the difference between what you have been paying on the high SVR versus what you would have paid had you been on the lower fixed rate when you attempted to switch your mortgage. Furthermore, you could expect an additional 8% p.a. of compensatory interest to be added to the lump sum payment.
Call US TODAY ON 01708385044-45 to discuss a potential claim with one of our financial product claim specialists. Alternatively, email email@example.com and someone from our team will contact you.