Not upheld: inadequate mortgage advice regarding timing of additional borrowing complaint against London & Country Mortgages Limited

Decision detail

Summary

Mr and Mrs R complained that L&C failed to provide sufficient detail about the implications of delaying additional borrowing when advising on a mortgage rate renewal in November 2024. They claimed that had they known the additional borrowing would be subject to an £11,500 early repayment charge or a higher interest rate (5.74% versus 4.24%), they would have applied for it at the time of the rate renewal. However, the ombudsman found that Mr and Mrs R had already decided to delay the borrowing after speaking to Lender V directly, and that L&C's adviser provided adequate warnings about the risks, including that Lender V may not agree to future borrowing and that the rate would be whatever was offered at that time. The ombudsman noted that if they had applied for additional borrowing at the same time as the rate change, the new rate could not have taken effect on 1 January 2025 due to underwriting timelines, and they would have paid interest on funds they didn't need. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman found that Mr and Mrs R had already decided to delay the additional borrowing before speaking to L&C, having discussed this with Lender V directly. The adviser provided adequate warnings that Lender V may not agree to additional borrowing at a later date, that a 5% ERC would apply, and that the rate would be whatever Lender V offered at the time. Mr R confirmed his understanding that the rate could be higher or lower. The adviser was not required to compare the costs of taking additional borrowing immediately versus later, as this was not the transaction being advised on. If Mr and Mrs R had applied for additional borrowing at the same time as the rate change, the new rate could not have taken effect on 1 January 2025 due to underwriting timelines, and they would have paid interest on funds they didn't need. The adviser discussed the length of the fixed rate product based on Mr and Mrs R's stated preferences regarding political uncertainty, making a 5-year term appropriate. Mr and Mrs R made an informed choice to proceed with the rate change and delay the additional borrowing.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website