Not upheld: mortgage application refusal / unfair lending decision complaint against NATIONAL WESTMINSTER BANK PUBLIC LIMITED COMPANY (NatWest)

Decision detail

Summary

Mr and Mrs S applied to NatWest for a new mortgage to purchase another home, seeking to port their existing interest rate product. They wished to increase their borrowing from approximately £145,000 to £170,000. NatWest's underwriter rejected the application in July 2025, finding it did not meet affordability criteria given Mr S's newly incorporated company (February 2024) and sabbatical status at the time of application. Mr and Mrs S proceeded with their house sale and incurred an early repayment charge on redemption. The ombudsman found NatWest's assessment was fair and reasonable, as the 17% borrowing increase was material and justified an affordability assessment, and Mr and Mrs S made an informed choice to proceed despite the consequences.

The Ombudsman's reasoning

The ombudsman found that no one is automatically entitled to borrow money and lenders are not obliged to lend again. However, lenders must treat customers fairly and assess applications in accordance with lending criteria and mortgage regulations. A 17% increase in borrowing is a material change to the mortgage terms, making an affordability assessment reasonable. NatWest legitimately assessed the requested increase as unaffordable based on Mr S's income situation at the point of application. Each lending application must be assessed on its own merits. Mr and Mrs S made an informed choice to proceed with the house sale knowing the consequences of redeeming without a new NatWest mortgage in place.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website