Unenforceable Mortgage Agreements – Advice: Claim Compensation On The Mortgage & Write Off Debts

Many people have entered into a high APR, adverse credit mortgage arrangements on the advice of an advisor. Most of these customers only had a minor adverse credit history or were even just self employed which is a clear example of mis-selling. It is possible to claim compensation.

Bad Credit Mortgages Are For Those With Genuine Adverse Credit

Whilst many do legitimately have bad credit, others have been sold an adverse credit mortgage by a mercenary member of a sales team. Bad credit isn’t as easy to define as it may seem as it can vary from bankruptcy to making a single late payment on a mobile phone contract.

Different Rates of APR Available For Adverse Credit Mortgages

Whilst late payments will create adverse credit, it isn’t nearly as serious as some mortgage advisors made their clients believe. Lenders offer an array of products that attract different rates of APR, depending upon the severity of the bad credit situation.

Why Were People Sold the Wrong Product?

Adverse credit product sales attract higher rates of commission so mortgage advisors unscrupulously sold them on. Not only were serious adverse credit products sold to people with a minor adverse history, but they were also sold to those with perfect credit.

Examples of Successful Cases

  • A customer was sold an adverse credit product simply because they had started a new job.
  • The credit history was fine, but they were self employed and had an irregular income.
  • A serious adverse credit product was sold at a higher APR when only minor adverse credit problem existed.
  • An interest-only mortgage was taken out when a repayment mortgage was vastly more suitable.

What If the Financial Ombudsman Decides That It Is An Unlawful Mortgage Agreement?

If sold the wrong adverse mortgage product there is a strong possibility that compensation can be claimed or even a full write off of the debt. The Consumer Credit Act 2006 extends rights to borrowers over £25,000, allowing access to the Financial Ombudsman.

Prevent Repossession

If a decision has been made to challenge the legality of the mortgage agreement and the lender attempts to force repossession, it is possible to block this until a decision has been made by the court. It isn’t possible for a lender to enforce a repossession order when conjecture exists regarding whether the agreement is legally binding.

Sell and Rent Back

If the mortgage isn’t adverse and a minimum of 25% equity available, it may be possible to arrange a sell and rent back to prevent repossession. This involves selling the house to a property cash buyer and then renting it from them.

Other Unlawful Credit Agreements

Those with other types of unlawful credit agreements for under £25,000 are covered by the Consumer Credit Act 1974. In the region of 60% of all loan agreements executed before April 2007 aren’t lawful and could be written off in full.

If financial problems are an issue it is crucial that unlawful loan agreements are legally challenged as it could potentially be life changing. For those facing repossession, a legal challenge could buy time to sort things out. It could even mean that the repossession never happens.