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Have you got an interest-only mortgage? Legal experts say thousands could be owed compensation; Borrowers could be owed money if they were advised to take interest-only mortgages when other loans were more suitable.

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Byline: Simon Meechan

Thousands of borrowers who were given interest-only mortgages could be owed compensation due to lenders mis-selling.

Legal Tech firm ME Group toldMortgage Solutionsthat experts expect claims to increase as borrowers with mature interest-only mortgages are starting to realise they may have been mis-sold their loan.

According to ME, many sellers broke rules regarding suitability and affordability when they gaveborrowersinterest-only mortgages before the financial crisis.

So could you be entitled to a pay out?

It's where the borrower doesn't pay back the capital, and only pays interest. But at the end of the term the borrower has to raise the capital to buy thepropertyoutright. This can involve "repayment vehicle" such as separate monthly payments to an investment or high interest savings account.

Your interest-only mortgage must be mis-sold to qualify.

TheFinancial Ombudsman Servicesays it will look into claims if it decides it is the lender wrongly advises the borrower to take an interest-only mortgage.

For that to happen, the borrower must have been specifically advised to take out an interest-only mortgage over a more suitable product.

The FOS says:

"We'll look into whether someone was advised to take an interest-only mortgage - or whether they were given information to decide for themselves. If we decide someone didn't receive advice, we might decide it isn't fair to say the broker (or lender) is responsible for their choice.

"If someone received advice about their mortgage, we'll decide whether an interest-free mortgage was a suitable option at the time - rather than in their circumstances now.

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