When booking a new fixed rate for a buy-to-let (BTL) mortgage, Raoul and Carmen were given mixed messages, which caused them inconvenience.
What happened
Raoul and Carmen had several buy-to-let mortgages with the same lender. One of these was coming to the end of a preferential interest rate, so they booked a new rate of 4.99% fixed for five years with a £1,995 product fee. The lender sent out a rate switch offer which they accepted and returned.
A few days later, Raoul and Carmen asked about rates for their other mortgages. In that conversation, they learned that the fixed rate they’d accepted had now been withdrawn. It had been replaced with a fixed rate of 4.84% and had a lower fee.
They asked the adviser they were speaking to if they could take that rate instead. The adviser said they could and generated the paperwork, which they signed and returned.
A month later Raoul and Carmen contacted the lender to find out why their mortgage hadn’t been switched to the 4.84% fix. The lender said they had no record of the call where the adviser had offered that rate, so Raoul and Carmen complained.
In its final response letter, the lender said that it couldn’t offer the lower rate, so Raoul and Carmen brought their complaint to us.
What we said
We looked at all the evidence and listened to both parties.
The paperwork that the lender had sent in the rate switch offer clearly stated, “You are free to decline this offer but we may not refund any fees you have already paid us.”
It also specified a date by which Raoul and Carmen could withdraw from the contract without paying fees. It was clear from the evidence that Raoul and Carmen hadn’t asked for the lower offer before that deadline.
But the lender’s adviser should have made clear that once Raoul and Carmen had accepted the 4.99% rate – and signed all the paperwork – they were bound by it unless they paid an early repayment charge.
The lender admitted that its customer adviser had made a mistake by telling Raoul and Carmen that they could take the 4.84% offer. And it was willing to pay compensation and suggested a figure of £300 to make up for the inconvenience caused.
However, Raoul and Carmen had spent a lot of time – and made a lot of phone calls – trying to find out why their mortgage wasn’t on the lower rate. So, we suggested that £400 would be more appropriate.
But we didn’t think it would be fair to expect the lender to offer them the lower interest rate that had never been available to them. The lender should have made that clear sooner, but that didn’t mean it had to honour the mistake its adviser made.