In February year my fiance and I embarked on buying our first home. Being oblivious to everything mortgage wise we went to The Mortgage Shop, an independant dealer in Northern Ireland. The guy there promised to get everything sorted and came up with the 1.5 year Flexi Fixed deal with Northen Rock which he said would give us time to get our careers going and then 18 months down the line we could come back and reduce our term etc.

The mortgage was agreed and when the house was built we completed in September of last year. The guy in the mortgage shop waved us off saying "see you in 18 months". I have just received a letter from Northern Rock stating that our mortgage deal will come to an end on the 1st of September this year. I dug out all of the policy documentation and sure enough although it is an 18 month deal it states that:

This secured mortgage is based on the following interest rate periods:

*A fixed rate of 5.69% until 1 September 2008

Finding this out has left me absolutely fuming. At no point did the financial adviser ever mention that the deal would run out at this date and he, nor Northern Rock, never provided us with any Key Facts documentation that could have enlighted us to this fact. Having spent over £1400 on fees alone for this product I feel totally conned and mislead. Had I known that it would last less than a year I would have told him where to go.

The Mortgage Shop is an appointed representative of Legal and General (who coincidently he also set us up with outrageous insurance with) and as such are regulated by the FSA. Do you think I would have any grounds for complaint against this adviser?

Thanks!!

Hi Lambie413,

I work for an organisation similar to the Mortgage Shop as an adviser so I would work under very similar regulations as the adviser you have been dealing with. When I source a product most have end dates for either the tracker or fixed rate period while others give a specific term (eg 2years from start date). As an adviser I have to go through the Key Facts Illustration and section 4 highlights the product type and end date for the product. Also I must give you a copy. Also you would have received a mortgage offer which would also highlight the end of the benefit period of the product which you should have read and any good adviser would have gone through this with you. Again this would have been in section 4 of your mortgage offer which you would have received and should have read so lodging a complaint about not being told about the end date my not be up-held considering the amount of literature you should have read and received prior to accepting the mortgage offer.

The main problem I see is the advice. To recommend a product with a £1400 arrangement fee and only being able to benefit from it for 18 (or 12 months in your case) is just bad advice. I've never recommended a mortgage for less than 2 years. If I have the slightest incling that my client would want to remortgage in less than 2 years I would have recommened a fee save product without penalties (a basic SVR product). Yes you pay a little more per month but you would not have paid £1400 more over 18 months. I do sympathise with your situation as you will now have to remortgage so quickly and pay another arrangement fee (I'm guessing NRock will not remortgage you unless you go on to their SVR). I am urging my clients to do a min 3 year prooduct so typically over a 25 year mortgage they would remortgage about 8 times rather than 12 time if you changed every 2 years.

Better still get a good 5 year product so you only have to remortgage 5 times in 25 years. You would save substantial amounts in arrangement fees by getting longer term products. The days of reviewing your mortgage every 2 years to see if the market has improved I feel are behind us. Since the start of the year the Bank base rate has fallen 2-3 times from 5.75% to 5.00% but all lenders have increased their rates or indirectly withdrawn from the market by reducing their LTVs to ridiculous levels.

I agree, you must recieve a Key Fact Illustration when a recommendationhas been made to you. But out of interest, did you not recieve a copy of the mortgage offer well in advance of completion? This also has the information set out in exactly the same format. At least at this point you could have uncovered the issue without commiting to the mortgage and had opportunity to recover any costs to that point if alternative Northern Rock products weren't suitable. The lenders sends these directly to the customer and one to the solicitor.

Did you sign the application without reading through the form, namely the product section?

I know people rely heavily on the expert and rightly so, but to commit to such a large financial commitment without having seen anything in wrtting to what you applied for until a year later?? Not sure the complaint would hold much ground unless you can evidience the mortgage broker breached regulations.

Another reason Northern Rock were regularly used was for their generous income stretches. You may not have had much option with regard lender but more with product. This may not be applicable in you case if the stretch wasn't required. A lot of times customers main goal is securing the property and possibly this is the prioirty the advisor was working towards.

You have a right to any information held on you by The mortgage shop under Data protection laws. Have a look at the factfind and suppoting documetation in relation to your file. This will help you with any possible case.

Don't mean to be negative, but this is what you may be faced with. Better to be prepared.