Mortgage holders are being warned about online schemes that promise to alleviate their debts but could actually worsen their financial situation. The Financial Conduct Authority (FCA) has raised concerns about online assertions suggesting that borrowers can evade mortgage payments by submitting a “promissory note” to their lender.
These notes claim that a third party, like a trust, will either provide funds for mortgage repayments or argue that the note itself should be considered as full repayment of the mortgage. Often, individuals facing financial difficulties purchase these notes hoping for a solution to their problems.
Some individuals may end up spending hundreds of pounds on these notes. The FCA clarified that a promissory note is not a legitimate method of mortgage payment, and sending one to a lender does not release the borrower from their obligation to repay the mortgage.
Greg Sachrajda, who heads the retail banking market interventions department at the FCA, stated that there has been an increase in borrowers attempting to use these promissory notes to clear their mortgages. During the festive season, financial challenges often come to light, making seemingly quick solutions to debt problems more attractive.
Sachrajda emphasized that these promissory notes do not fulfill their promises of clearing mortgages and do not result in any actual payments being made. Lenders are rightfully rejecting these notes, cautioning borrowers against falling for what may seem like an easy way out of debt.
By relying on these notes, individuals risk exacerbating their financial troubles by spending significant sums of money on worthless schemes instead of proactively engaging with their lenders for viable solutions.
Mortgage providers typically return these notes to borrowers along with guidance on legitimate methods of mortgage repayment. Sachrajda stressed the importance of borrowers contacting their lenders for practical assistance and considering seeking help from reputable debt support organizations.
Misinformation surrounding mortgages online can harm mortgage borrowers, especially those struggling financially. Sachrajda advised against wasting money on ineffective promissory notes and urged individuals to seek genuine support from lenders and debt support charities.