Hareem’s recovery from illness took longer than expected. But his mortgage lender wouldn’t let him keep making reduced payments.
What happened
Hareem had been unwell and was unable to work his usual hours, so he was getting less income. He spoke to his mortgage lender and asked if it could reduce his repayments until he was back to his usual hours. His lender agreed a reduced payment arrangement for six months.
But Hareem’s recovery took longer than expected, so he requested 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. 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. In its final response, the lender said it had considered Hareem’s situation and didn’t think it had acted unfairly by refusing the extension.
Unhappy with this, Hareem contacted us.
What we said
We asked Hareem about his medical condition. He explained that his recovery was taking longer than expected, but his consultant was confident he’d be back at work within two months. A couple of months after that, he should be able to resume full-time work.
We thought the lender should have taken this into account. It was reasonable to be concerned about whether Hareem would be able to make up the missed payments when he went back to work. But the lender could have discussed other options with Hareem.
The lender could have capitalised the arrears, that is, added the missed payments to the total amount owed for the mortgage. Other options included extending the mortgage term to reduce the payments or agreeing to give Hareem longer to repay the missed payments.
Taking into account Hareem’s situation and the medical evidence, we thought the lender should have extended the payment arrangement until his return to work.
We upheld Hareem’s complaint. 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 and the worry caused when he was trying to focus on his recovery, we decided £400 was fair compensation.