Remortgage Protection is Essential, Make Sure You're Not Missold a Mortgage

The Financial Services Authority (FSA) who are responsible for regulating all of financial services including mortgages has fined one of the well known lenders after discovery of their mis-selling.

The lender, who are part of Deutsche Bank were fined just under a million pounds by the FSA. The reason? That old story of mis-selling. The FSA ruled that the mortgage lender had been irresponsible in their lending practices and had also been unfair with charges that they had made to customers who had fallen behind on payments.

This is the first time the FSA has brought a case of this kind against a mortgage lender in the UK. It finally shows lenders that if they lend irresponsibility they could be severely punished. As we all know, the days of 150% and 200% Mortgages are over for the foreseeable future, but this recent action means the lender will ultimately could pay for such decisions.

To avoid court action and the potential of significant financial penalties, lenders will now have to ensure that they lend responsibly. For example, they will have to ensure that borrowers are not being encouraged to borrow higher loans than they can afford. In addition, they will have to take great care over home loans that continue into a borrower's retirement.

In another ruling that is likely to benefit borrowers, DB Mortgages were forced to repay fees and charges where the amount charged did not accurately reflect the administration work involved. This successful challenge mirrors the claims against High Street banks for the level of charges being applied to current accounts.

This ruling is likely to fundamentally change the landscape of the mortgage industry. The Financial Services Authority (FSA) was keen to point out to the City that it would no longer tolerate poor lending practices of this kind in future. The level of fines and charges refunds also sent a strong message to lenders that they would have to tighten their mortgage practices.

From a borrower's perspective this looks like great news as this gives them even more protection. Obviously the best protection is to try an avoid problems at the start by asking the correct questions. The FSA is a body can only work retrospectively, after the horse has bolted and after the stress and heartache that a mis-sold financial product can cause.

If you decide to remortgage, ensure that you know all fees and costs involved before signing on the dotted line. This is important as you could end up paying more and subsequently fall into arrears if you've not explored all costs.

When considering a mortgage or remortgage, always make sure that you research the products carefully. Make sure you know what the charges are and be sure that you can afford the mortgage payments. Don't be talked into borrowing more than you are comfortable with and make sure the lender is fully aware of all your personal circumstances.

Because of this recent case, it may well be a good time to take any issue you have to the FSA. If you have borrowed in the last few years and feel you may have been mis-sold or over charged then contacting the FSA might be a good start.


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Timothy Frodsham writes for Just Commercial Mortgages.com the UK's No.1 site for the latest commercial mortgage rates and commercial property finance news.