Not upheld: Mortgage administration / arrears handling complaint against Equifinance Limited

Decision detail

Summary

Mrs O and Mrs O complained that Equifinance Limited delayed in agreeing to a deed of postponement for their second charge mortgage, preventing them from completing a remortgage with a new lender by their 29 February 2024 deadline and causing them to be locked into a higher interest rate with their previous lender. Equifinance initially refused the deed of postponement because the proposed additional borrowing would increase the combined LTV to around 95%, exceeding its 85% maximum threshold, and later cited affordability concerns. After the complainants reduced their borrowing to a like-for-like amount, Equifinance agreed to the deed on 28 February and issued it on 29 February, but too late for completion. The ombudsman found that Equifinance's decisions were fair and reasonable, that it processed the applications efficiently within 17 days, and that the 29 February deadline resulted from the complainants' own decision to accept an offer from their existing lender and then change their minds, not from any failing by Equifinance. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman found that Equifinance's decisions to refuse the initial applications were fair and reasonable given the increased LTV risk (exceeding its 85% maximum) and affordability concerns. The ombudsman noted that a second charge lender faces greater risk than a first charge lender and is entitled to set and enforce maximum LTV thresholds. The ombudsman concluded that Equifinance processed the applications efficiently, considering four separate applications within 17 days and providing clear decisions. Crucially, the ombudsman found that the 29 February deadline was not caused by Equifinance but resulted from the complainants' own decision to accept V's offer and then change their minds to pursue C's mortgage instead. The ombudsman stated that Equifinance made considerable efforts to meet the deadline and acted as quickly as reasonably expected.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website