Not upheld: Mortgage administration / arrears handling complaint against Castle Trust Capital PLC

Decision detail

Summary

R, a limited company, purchased a property for holiday lets with a £225,000 commercial mortgage from CTCP over 36 months at 5.29% interest. When the loan term expired in 2023, R could not secure sufficient alternative financing and requested extensions. CTCP initially offered extensions at increased rates, then after R's complaint, offered a three-month extension at the original rate. When R applied to refinance for one year, CTCP declined the application after a new valuation revealed the property construction fell outside its lending criteria, though the original 2020 valuation had not identified this issue. R complained that this was unfair given CTCP had originally agreed to lend based on the first valuation. The ombudsman found CTCP acted fairly, as it was entitled to rely on both qualified valuations and decline the application based on updated information about the property's construction.

The Ombudsman's reasoning

The ombudsman found that CTCP was entitled to decline the 2024 refinancing application because the property construction fell outside its lending criteria as revealed by the new valuation. The original loan was a 36-month fixed term that had fully expired, making any continuation a new application rather than a simple product switch. CTCP was entitled to rely on both valuations conducted by qualified RICS surveyors and cannot be held responsible for issues stemming from the original valuation. CTCP's actions in offering extensions and concessionary interest rates were reasonable and went beyond its obligations, as there was no requirement to extend or renew the loan once the term expired.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website