Partially upheld: mortgage application decline and provision of incorrect information complaint against Santander UK Plc

Decision detail

Summary

Mr and Mrs S applied to port their Santander mortgage interest rate product to a new property purchase requiring substantially more borrowing (£260,000+) than their existing mortgage (£120,000). Santander declined the application due to affordability constraints but incorrectly told Mr S the reason was Mrs S's credit history and failed to mention appeal rights. When Santander subsequently offered to proceed at a lower lending amount (£253,288), Mr S declined, stating it was too late. Mr and Mrs S obtained a mortgage from another lender, incurring an early repayment charge and additional fees. The ombudsman found Santander's error warranted £500 compensation but rejected claims for reimbursement of transaction costs, as the evidence showed Mr S would not have accepted any offer below £260,000 and therefore would have incurred these costs regardless.

The Ombudsman's reasoning

The ombudsman found that while Santander made an error in stating the reason for decline was credit scoring rather than affordability, and should have informed Mr S of appeal rights, the evidence clearly showed Mr S had consistently and explicitly stated he required £260,000+ in borrowing. Santander's maximum offers of approximately £243,500-£253,000 fell short of this stated requirement. When Santander offered to proceed at £253,288 on 10 June 2025, Mr S declined, stating it was too late and that Santander had already made its decision. The ombudsman concluded that Mr and Mrs S would not have proceeded with Santander in any event given the lending shortfall, and therefore the costs they incurred (ERC, new mortgage fees, increased interest) would have been incurred regardless. The error regarding the reason for decline warranted compensation, but not reimbursement of transaction costs.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website