In the Ombudsman’s latest newsletter it included a number of case studies featuring older borrowers that felt they had been treated unfairly by their lender.
In one instance, a widow in her eighties received a letter from her lender explaining that the term of her 10-year interest-only mortgage was coming to an end. When she asked if the mortgage term could be extended for the rest of her life the provider refused on the grounds that it was not policy to extend mortgage terms to borrowers over the age of 75.
At the time of taking the mortgage out, the borrower and her late husband had informed the lender that they did not have any arrangements in place to repay the capital at the end of the term.
Despite objections from the lender that the borrower still had time to find a way of repaying the capital when the mortgage was taken out, the Ombudsman held the lender responsible for placing the customer in her current position.
The provider was forced to extend the term of the interest-only mortgage indefinitely, allowing the capital to be repaid when the customer’s home was eventually sold.
In another case a borrower in his eighties discovered in a call with his mortgage lender that instead of holding a lifetime mortgage, which he thought had originally been taken out, he had a 25-year term.
The Ombudsman agreed that the provider had offered the correct information regarding the terms of the mortgage when it was issued, but argued that the lender had failed to give any personalised advice, taking into account the borrower’s age and circumstances.
Faced with the prospect of selling his home when he reached his late 90s, FOS upheld the borrower’s complaint and ordered the lender to convert the mortgage from a 25-year term to one with no set end. This would allow the customer to use monthly pension payments to cover the interest payments, with the capital being paid back with the equity from the sale of his property after he died.