Customers on overpriced mortgages fight for compensation

April 13, 2017 by Brendan

Lenders

Thousands of people who are stuck on a lender’s Standard Variable Rate (SVR) may be able to claim for compensation, following a landmark ruling in a case against Lloyds Banking Group.

The customer, who remains unnamed, remained on a SVR for four years with Bank of Scotland, paying thousands extra in interest as the lender refused to approve a move to a cheaper fixed rate deal.

Although many of the fixed rate deals are at their lowest ever, the SVR of lenders is generally much higher. New rules which have been introduced since the financial crisis, like the Mortgage https://www.beaconfinancialtraining.co.uk/wp-content/uploads/2020/06/cemap-online-and-classroom-training-uk.jpget Review, mean that the lending criteria has changed, and many borrowers fail the new, stricter criteria, leaving them stranded on the lender’s SVR.

According to a report in the Telegraph Money, the Financial Ombudsman Service has ordered the Bank of Scotland to allow the customer to move to a fixed rate deal, with much lower interest rates. The bank has also been ordered to pay the difference between the payments made and the lower rate which the customer should have been paying, plus compensation of £350.

Experts believe that this case could set a precedent. Customers who are stranded on an SVR of around 4% will be requesting to switch to a fixed rate deal, possibly cutting monthly repayments in half.

CeMAP qualified mortgage advisers are able to help borrowers find cheap fixed rate deals with a range of lenders, other than the main banks.