William’s lender switched his mortgage from repayment to interest only, leaving him with a larger balance at the end of the term.
What happened
William discovered his lender had switched his mortgage from repayment to interest only. When he called the mortgage lender, it told him that the repayment mortgage was still in place, and the payments were correct. But all the while, William was only paying the interest on the loan and not reducing the amount he owed.
Every year, the lender sent William annual statements which clearly showed his mortgage was interest-only. William didn’t question this until he was coming to the end of the mortgage term, five years after the interest-only statements started arriving. At that point, his balance was too high to repay the mortgage within the term.
The lender accepted it had made the original mistake and met the underfunding for the first two years following the error. But the statements were clear and William hadn’t questioned why they showed his mortgage was still interest-only or why his balance wasn’t going down.
What we said
We acknowledged the lender’s error but also thought that William should have raised concerns about the incorrect statements earlier.
With this in mind, we thought it was reasonable for William’s mortgage lender to pay for two years of underfunding. But we didn’t ask it to compensate him any further and we didn’t uphold William’s complaint.