Help! What do we do now?

Tom_and_Jerry

16 years ago my mother took out a very small (interest only) loan secured on her home with The Chorley building society. They were an award winning mortgage provider and between 1999 and 2007 had a relatively fair SVR that tracked the Bank of England base rate within a margin or about 1.5%. However, as rates began to tumble
The Chorley changed this established practice and allowed the margin to increase and increase. When the base rate finally bottomed out in 2009 at 0.5% their SVR was 6.15%. A few months later when it seemed clear the base rate would remain low they lowered their SVR to 5.49% and there it has stayed. While rates have been at record lows and lenders are supposed to be benefiting mum has seen no benefit and is actually paying more interest now than when the base rate was 3.5%.

It is totally impossible for mum to remortgage as she is on a small pension and is 89 years old. After making small monthly over payments the capital has reduced from £15,000 to £12,000 in the past few years. It is only a relatively small amount but we have a tiny income between us (I am her carer on a carer’s allowance) and can not pay more. Even if we could remortgage the capital needed for valuations, fees etc is something we just don’t have. It is clear that The Chorley knows this predicament and have therefore offered no other products or assistance. I felt it was grossly unfair that a building society that sold itself on the strength of its mortgage products could not now be passing on any of the rate reductions that were clearly intended to stimulate the economy by reducing lending costs. The margin mum pays now now is more than 3 times what it was.

I felt this was so unfair I contacted the Ombudsman. What a waste of time. After several months sending pages of letters/ documents all they basically wanted to know is ‘did they (the bank) send you all the relevant letters in response to your complaints in a timely manner’? They are totally uninterested in the rates. The Chorley could have made the SVR 30% and the Ombudsman's response would have been exactly the same. Their interpretation of 'being treated fairly' is all to do with ‘paperwork’ and nothing to do with ‘why it should be fair that the bank uses cheap tax payers money so they can recover from the crisis at the expense of their lenders’. What's more, the Ombudsman has now effectively sanctioned our Building Society to do whatever they wish with Mums interest rate and she is totally trapped. What do we do now? Who can we turn to?

amnblog

I don't remember Chorley BS using tax payers money?


Your mother could consider equity release but you may find that although it helps with cash-flow, now it still leaves you with a debt to repay later.

pjread

Have you actually called the lender and asked about alternative products at any point?

even at 5.5%, on a £12k mortgage that's only about £55 a month interest - are you completely unable to pay more than that? Also, when does the mortgage end, and what's the plan for repaying the capital?

ACG

Its not exactly clear from your post what your complaint is...

How did your mum intend to clear the mortgage? Nobody knew rate drops were coming and prior to the recession they were approximately 5% so payments would not have altered too much one way or the other. You cant really argue that rates dropped and you were going to use the lower rates to make payments, unless you knew something the rest of the world did not?