Partially upheld: end of term mortgage handling, service failures, overpayment of legal fees, inadequate communication regarding payment changes complaint against Bank of Scotland plc trading as Halifax

Decision detail

Summary

Mr and Mrs S complained about how Halifax treated them when their interest-only mortgage term ended in January 2024 and they were unable to repay the capital. They had been granted two Sale of Property holds while attempting to sell their property, but when the second hold expired in January 2025 and they had not met affordability criteria for a term extension, Halifax proceeded with legal action. Mr and Mrs S raised multiple complaints about the handling of their situation, including issues with payment amounts, legal fees, and the frequency of required contact. The ombudsman found that whilst Halifax generally acted within its rights and policies, it failed to discuss with Mr and Mrs S the impact of overpayments resulting from fixed monthly payments and overestimated legal fees by £946.70. The complaint was partially upheld with orders for £200 additional compensation and 8% interest on the legal fees overpayment.

The Ombudsman's reasoning

The ombudsman found that whilst Mr and Mrs S faced difficult circumstances, Halifax generally acted within its rights and policies. The mortgage term had ended and capital was due; Halifax was entitled to expect repayment. Halifax's Sale of Property hold policy (maximum two holds of up to 6 months each, not extending beyond 12 months after term end) was correctly applied. Halifax was not unreasonable in requiring a capital repayment basis for any term extension given the property had been on market over a year without selling. However, Halifax failed to discuss with Mr and Mrs S the impact of overpayments resulting from fixed monthly payments based on the initial 8.74% SVR rate whilst the actual SVR reduced. Additionally, Halifax overestimated legal fees in the redemption statement, resulting in a £946.70 overpayment. The ombudsman rejected complaints about: the complaint handling process (which was resolved on the call as agreed), Halifax not discussing pension drawdown (inappropriate for a mortgage lender), the requirement for solicitor involvement in remortgage (standard practice), and the frequency of required updates (reasonable given the mortgage was overdue).

How this compares

Source

Read the original decision on the Financial Ombudsman Service website