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Bank of Scotland mortgage prisoner trapped on £2m self-cert deal wins fight to switch

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  • 17/03/2017
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Bank of Scotland mortgage prisoner trapped on £2m self-cert deal wins fight to switch
Bank of Scotland has paid £29,000 in compensation to a customer who it trapped on a Standard Variable Rate, after offering a £2m self-cert interest-only mortgage on a 0.45% base tracker, in 2008.

Property developer Philip Pantelouris, 56, was advanced the mortgage to buy a mansion in Dumfrishire, the Telegraph reported. By 2011, with a Bank base rate of 0.5%, Pantelouris was being charged just 0.95% interest on his mortgage, which swiftly rose to 4.59% when his deal rolled on to the bank’s Standard Variable Rate. This drove his monthy payment up to £4,000. BoS would not allow the borrower to switch onto new a mortgage product because it said he failed affordability checks, even though the new payment would have been lower.

In 2015, Pantelouris tried again. This time the bank said he could not be offered a new mortgage deal because he did not have an acceptable repayment vehicle.

Pantelouris was eventually offered a new deal, after taking his case to the national newspaper. He has since been offered a rate of 2.75% which more than halved his payments to £1,796 and has been offered a refund of £29,000 to compensate him for the overpayments paid since his request in 2015. The bank said it has no record of his request to switch in 2011.

Mortgage Solutions carried out its own research into how banks and building societies were using flexibilities built into MMR affordability, to prevent borrowers like Pantelouris becoming mortgage prisoners. The results revealed wide variances on how lenders identified and treated existing borrowers under the Transitional Arrangements, and a reluctance from some firms to offer simple and transparent answers when asked to relinquish any details about their processes.

A spokesperson for Bank of Scotland said: “We recently agreed a resolution with Mr Pantelouris that enabled him to transfer to a mortgage product most suitable for his current circumstances.

“Mr Pantelouris provided evidence of a previous request for a product transfer. We have retrospectively put in place the rate for which he would have first been eligible plus accompanying interest, which has now been paid to Mr Pantelouris.

“We will review any future request from Mr Pantelouris for a new rate when his current rate expires in two years’ time.”

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