Not upheld: post-death mortgage management and arrears handling complaint against Santander UK Plc

Decision detail

Summary

The estate of Mr S, who passed away in March 2021, complained that Santander unfairly managed his interest-only mortgage by increasing the loan balance by over £20,000 and failing to offer appropriate support or agree to a mortgage transfer. The mortgage had a capital repayment date of 2023. After Mr S's death, his wife Mrs S intended to remain in the property, but no formal mortgage transfer application was made. Mrs S subsequently passed away in 2024, and by June 2025, arrears had accumulated to approximately £23,000, prompting Santander to instruct solicitors to begin repossession proceedings. The ombudsman did not uphold the complaint, finding that Santander had allowed reasonable time for resolution, properly explained options, and fairly charged interest on arrears when the family's fixed payments became insufficient to cover the increased interest after 2023.

The Ombudsman's reasoning

The ombudsman found that Santander acted fairly because: (1) Mr S was the sole borrower and the mortgage was contractually due for repayment upon his death; (2) even without his death, the interest-only mortgage would have required full repayment in 2023; (3) Santander allowed a reasonable time period (approximately 4 years from death to repossession action) for the family to find a solution; (4) Santander explained available options including lifetime mortgages; (5) the increase in mortgage balance was due to arrears and additional interest on the higher balance, which is not unfair when payments are insufficient to cover interest; (6) it is not unreasonable for Santander to expect repayment, particularly as the mortgage term had ended three years prior and the balance continues to increase indefinitely.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website