Santander - huge mortgage problem

needhelpdesperate

am a bit stuck.

My mom and dad received a letter from their bank in June informing them there was nearly £20,000 outstanding on their mortgage!

This came as a bit of a shock as they have religiously and reliably payed their monthly payments every months since before I was born.

In 2004 my dad was made redundant and ask for a three month interest only period to be put on his mortgage while they got their finances sorted. He then received a letter to say it had all been converted back to repayment - happy days.

In fact two parts of the mortgage loans were not converted back! they have been interest only since then - hence there is a huge amount to pay.

they queried this with the bank in June. It took until last week to get an answer. they have said it was their mistake but my dad should have noticed on his annual statements and they have made a paltry monetary gesture of reducing the amount. at the end of the day his balance was reducing and he just assumed it would be done by the time the term ended.

so now they are worried and scared, my dad has had shingles and my mom has developed vertigo and is off sick from work. I think its all stress related.

i think they should go to the ombudsman. i accept they wont get a full pardon but how responsible is the bank for the mistake and how much should they be offering?

any advice.

i have spoken to the bank and their fall back position is what they " were letting themselves in for!!!!" they also said that " my dad should have known there was a balance outstanding as this is what interest only does" I said but he only asked for a three month holiday on a repayment so how was he supposed to know?!?!?

help - thank you

Dave_Ham

Hi - whilst Santander are not necessarily easy to deal with currently, I do not believe you will get much change out of the Ombudsman.

Ignorance is not going to be a suitable defence in my opinion. I would concentrate your efforts on what you can do now in order to get the amount paid off.

All the best

Let_Us_See

I half agree with DH, but Santander also have a duty of care to their clients. If they have admitted their error in writing (or not) then I would go to the FOS as any award will assist in repaying capital of IO mortgage.

needhelpdesperate

they have admitted their error in writing and on the phone. we have a letter that clearly states everything has reverted back to repayment status. my dad was not looking for an error and never expected one. yes he should have seen it but at no point up until june and they EVER contacted him and asked how he would be dealing with the outstanding balance yet people on here are getting letters asking them that exact question six years before the term ends??? they have then taken over four months and a lot of phone calls to get to this point.

leccyblue

Whilst it is the banks error, surely your Dad would have realised, when switching from repayment to IO and then back to repayment again, that the monthly payment wasn't as much as it was originally? Which should have set alarm bells ringing, as the monthly payment should have increased slightly (over the same term) to cover the capital not paid back during the IO period. I think this is the problem - that, and seeing annual statements never decreasing would cause most people to raise a question.

However! Having said that - if they have admitted the error in writing, and you also have letters confirming it had switched back to repayment - then I would still complain to the Ombudsman. You have nothing to lose. Just be prepared for a bit of scrutiny - they may not think it is acceptable that annual statements weren't checked for example.

Thrugelmir

The annual mortgage statements would have shown that the balance wasn't reducing. Too many years have passed to be a believable story that they didn't realise.

Have any payments been made since June to reduce the balance owing?

StuC75

What exactly is it they hope to get from this?

annual statements would have shown the same balance across the different Sub account that they have.

The parents have some responsibility for not checking this - even in the first instance of why payments hadn't gone back up after the 3 month 'break'..

Is the £20k the balance now, or the projected shortfall in 6 years?

Can they increase there payments asap to get things back on track?...

Depending on ages there best hope may be to extend the term out to make overpayments 'bearable'... but would pay more in interest so that isn't the most mse suggestion..

JasX

+1 to the above.

Your father hasn't actually lost any money (well a small sum in additional interest, possibly already covered by santander's offer, have you checked their calculation yourself?)

He will still need to repay the money he borrowed originally on the mortgage, unsure what he's expecting as 'compensation' for simply 'not repaying the loan at the precise speed he wanted to'. Certainly won't be grounds for avoiding paying off substantial parts of the original loan.

ACG

JasX wrote: »

Your father hasn't actually lost any money (well a small sum in additional interest, possibly already covered by santander's offer, have you checked their calculation yourself?)

This is correct, but lets be realistic... If you had £500 leftover at the end of the month your not going to leave it there are you? Your lifestyle changes depending on what you can afford. So what the OP parents would have been using to cover their payments has probably been spent elsewhere now.

That being said, both parties are responsible for this. Santander for not doing what was asked, Parents for not noticing.

I would make a formal complaint until you get a final response. Make the decision as to whether that is enough or not, if not you can then refer it to the financial ombudsman.

I suspect at most you are going to get any additional interest you have had to pay plus a compensation amount but i dont think we will be talking thousands, but i would certainly push it as far as possible - baring in mind any additional stress Santanders replies are going to bring on.

needhelpdesperate

The mortgage is split into six sections. Four went back to repayment, two did not. Therefore the payments went back up and the balance was coming down. My dad assumed it would be enough on his statements and did not scrutinise. . Loan 5 has reached expiry (this month) and they wrote about the balance in June.x this is when the problem was realised by my dad. He has made incessant phone calls to Santander who have been rubbish. Their health has really suffered. I appreciate it is an oversight on their side but Santander are also surely culpable to a degree. How we pay the remainder is in hand but I am cross with Santander. Their explanatory letter about the !!!! up is so difficult to understand!

Goldiegirl

As they have admitted making an error, I would suggest that the way forward now is to find a mutually agreeable solution.

Although your dad should have noticed from his statements that debt was not reducing as quickly as it should have done, I agree it may well have been difficult in the situation you have described.

Furthermore, as the debt has not reduced on part of the mortgage, more interest has been charged, than it would have done if they'd put the mortgage back to repayment.

Although it could be argued that your dad has had the benefit of the money he should have been paying to the mortgage.

I'd suggest it wouldn't be out of order to ask them for an ex gratia payment to be made to the mortgage to contribute towards the additional interest that has been charged as a result of their error, and and now an extension in the mortgage term to allow your dad to pay off the mortgage at a monthly rate that is affordable.

But the key is negotiation, not being angry in dealings with them. A reasonable customer gets more help than a stroppy one!