Linda lost her job as a result of the Covid-19 pandemic. She contacted her mortgage lender and asked if they could arrange some support following the change in her financial circumstances.
The lender agreed a reduced payment plan based on what Linda could afford for the next six months. Linda then contacted her lender six months later and asked if they could switch her mortgage to interest only as she was still experiencing financial difficulty. The lender refused her request.
Linda didn’t think her lender considered her circumstances and felt she had been treated unfairly. She was experiencing a change in her financial circumstances due to the pandemic, which was something out of her control, so she complained. Unhappy with the outcome, Linda contacted us and made a complaint.
What we said
We saw that the lender had asked Linda about her income and expenditure, and had agreed a reduced payment arrangement based on what she could afford for six months while she looked for another job. We thought that was fair and reasonable.
We didn’t think it was fair to expect the lender to switch the mortgage over to interest only permanently, because Linda had no means of repaying the capital at the end of the term (such as an investment or savings pot). And switching it to interest only temporarily is a type of reduced payment arrangement – but the lender had already agreed an arrangement with Linda based on what she could afford at that time.
We said that Linda and her lender would need to work together if the arrangement was no longer affordable and potentially agree a new temporary reduced payment arrangement – which might be just paying the interest.
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