Not upheld: mortgage calculation and administration; alleged failure to reduce capital debt appropriately complaint against HSBC UK Bank Plc

Decision detail

Summary

Ms E complained that HSBC was not properly reducing her mortgage debt, despite making payments of £5,284 from March to November 2025, with only £1,369 reduction in capital. She had taken out a mortgage in two parts in November 2023 over a 10-year term, then ported and extended it to a 17-year term when moving house in 2024. The ombudsman found that HSBC had correctly explained how the mortgage worked and that the slow capital reduction in early years is standard practice for capital repayment mortgages, particularly when extended to longer terms. The ombudsman reviewed the mortgage statements and found nothing indicative of error. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman found that capital repayment mortgages are designed to be 'front loaded' with interest, which is standard industry practice and permitted by the regulator. In the early years of a mortgage term, when the capital balance is highest, most monthly payments cover interest rather than capital. This is particularly pronounced when a mortgage is extended to a longer term (17 years instead of 10 years), as Ms E's was when she moved house. The ombudsman reviewed the mortgage statements and found nothing out of place or indicative of error by HSBC. The reduction in capital shown was consistent with what would be expected in the early years of a 17-year mortgage term.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website