Consumer unhappy mortgage lender refused to extend a reduced payment arrangement

Mortgages Financial Difficulties

Hareem had been unwell and his recovery was taking longer than expected. He  was receiving less income due to his reduced working hours, so he contacted his mortgage lender to ask for an extension on his reduced payment plan.

What happened

Hareem had been unwell and was unable to work his usual hours, so he was receiving less income.

Hareem spoke to his mortgage lender about his situation and asked if they could reduce his mortgage repayments until he’s fully recovered and able to get back to his usual work hours. His lender agreed a reduced payment arrangement for six months.

Hareem’s recovery was taking longer than expected so he requested for an extension on his reduced payment arrangement. The lender refused. It said it was worried about whether Hareem would be able to make up the missed payments when he went back to work – and the longer he was making reduced payments, the more he would have to make up later.

Hareem disagreed. He felt his lender hadn’t properly considered his circumstances, so he made a complaint. The lender said in its final response that they have considered his situation and don’t think they have acted unfairly by refusing the extension.

Unhappy with the outcome, Hareem contacted us and referred his complaint.

What we said

We asked Hareem about his medical condition. He explained that his recovery was taking longer. But his consultant was confident that he’d be back at work within another two months – and should be able to resume full time working a couple of months after that.

We thought the lender should have taken this into account. It was reasonable to be concerned about what would happen to the missed payments when Hareem went back to work – and whether he’d be able to afford to make them up. But we reminded the lender that there were options it could discuss with Hareem  at that time, including capitalising the arrears, extending the term to reduce the payments, or agreeing a longer time for Hareem  to pay the missed payments back.

Taking into account Hareem’s situation and the medical evidence, we thought the lender ought fairly to have extended the payment arrangement until his return to work. We told the lender to backdate an extended arrangement, and to pay Hareem compensation for the distress and inconvenience its refusal had caused him. Given Hareem’s health situation at the time and the extra worry this had caused him when he was trying to focus on his recovery, we thought £400 was fair compensation.