The story about customers of Northern Rock and Bradford & Bingley trapped in their expensive mortgages reported in The Times begs the question "Are You Overpaying On Your Mortgage?" It shows very clearly the advantages of using a whole of the market independent broker. We reproduce the article below.
Mortgage prisoners start legal action against banks
Jonathan Ames, Legal Editor, December 18 2019, 12:01am, The Times
Hundreds of thousands of homeowners trapped in expensive mortgages are threatening to sue two nationalised banks over allegedly excessive interest rates and unfair charges.
Lawyers for the mortgage prisoners, so called because they cannot switch to cheaper deals, said that between 150,000 and 200,000 borrowers with Northern Rock and Bradford & Bingley “will have overpaid tens of thousands of pounds” each.
Yesterday letters of claim were sent to UK Asset Resolution, a holding company established by the government in 2010 to manage the assets of the two banks after they collapsed in the financial crisis.
The lawyers said that their clients took out their mortgages usually with Northern Rock, Bradford & Bingley or its brand Mortgage Express.
After the financial crisis the banks “became inactive or zombie lenders” or their mortgage books were sold to other financial institutions, including inactive subsidiaries of TSB and the Co-operative Bank.
In a statement Harcus Parker, the London law firm representing the homeowners, said: “This meant that when borrowers came to the end of their fixed-term mortgages they were not offered any new deals and instead placed on a high standard variable rate.”
It is alleged that under strict lending criteria imposed after the crash, the borrowers were generally unable to re-mortgage with other lenders
If the rates charged by the banks were between 2 per cent and 3 per cent higher than what was considered fair, the overpayment of interest on a £100,000 interest-only mortgage over ten years would be between £20,000 and £30,000, the lawyers claimed.
The core claim against the banks is that they failed to treat those borrowers fairly, and to set their rates at a fair level.
Among the borrowers are “people whose families have been broken apart, who have lost their businesses, and say they have suffered sometimes life-threatening health problems because of the high cost of their mortgages”.
Damon Parker, a Harcus Parker partner, said: “We already have hundreds of case studies but we believe the number of those who have been affected by this could run into hundreds of thousands.”
The banks have three months to respond. If the claimants are not satisfied with the response it is likely that they will start court proceedings, their lawyers said. UK Asset Resolution had no comment.
Independent Advice
The Mortgage Bureau is independent of both lenders and estate agents. This provides clients with the best possible range of options. The selling estate agent will not know their budget which enables the best purchase price. Furthermore, they will have access to the whole of the market on loans and insurance projects. It is part of the service to conduct regular reviews to ensure that you are not overpaying on your Mortgage. This involves switching between lenders when it makes financial sense to do so. This can save tens of thousands of pounds over a typical mortgage load period.
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