Interest-only mortgages, the next mis-selling scam?

If you have an interest-only mortgage, you could have been mis-sold.

In recent reports issued by the legal tech company, ME Group, it appears that hundreds of thousands of interest-only borrowers may have been mis-sold interest-only mortgages by unscrupulous brokers.

The Financial Ombudsman supports the allegation. It seems likely that many advisors contravened regulatory rules on affordability and suitability when they sold interest-only mortgage products before the financial crisis of the late 1980s and early 1990s.

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What’s the issue with interest-only mortgages?

As the name suggests, the repayments you make on an interest-only mortgage only cover the interest. So, you’ll need another means of paying off the capital, i.e., the money you were lent to purchase the property, at the end of the mortgage term.

Some homeowners are now discovering that paying off the capital part of their mortgage is a problem and feel that taking out an interest-only mortgage was not the best option for them.

So, who’s responsible for mis-selling interest-only mortgages?

In many interest-only mis-selling cases, the fault is that of the lender or the mortgage broker who sold the mortgage. It’s the seller’s responsibility to check that you will be able to pay off the mortgage at the end of the term

How were interest-only mortgages mis-sold?

If the salesperson provided you with information about an interest-only mortgage and explained how it works, but then left you to make your own decision, it’s unlikely that you were mis-sold.

If the salesperson advised you to take out an interest-only mortgage, a mis-sale would depend on whether that sort of mortgage was the best option for you at the time of the sale, not in your current circumstances.

If you took out an interest-only mortgage and you’ve suffered financially because of it, you may be entitled to compensation for mis-selling.

To find out if you have been mis-sold, have a chat with our friendly team by calling us direct on 01270 44 66 11 or completing the online form.

We work on a “no win, no fee”* basis and your compensation award could be worth at least £18,000**.​

What should I do now?

If you were advised to take out an interest-only mortgage, despite having no apparent means of repaying the capital loan at the end of the mortgage term, you might have been mis-sold.

If you think you have been mis-sold an interest-only mortgage, it’s well worth talking to Crystal Legal by calling us direct on 01270 44 66 11 or completing the online form

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* Charge may be applicable if cancelled after the 14-day cooling off period
**Compensation award before taxes, charges and deductions