For years and years, mortgage providers have used their somewhat unfair conditions to bully borrowers into paying thousands of pounds in legal charges and extra charges should there have been a default and the majority of borrowers never challenge the conditions because they are simply not in a financial position to do so.
In the case below, in the Court of Appeal, a borrower was successful in challenging their mortgage conditions. I feel this is only the tip of the iceberg and believe there is an absolute mountain of litigation to be taken to court against mortgage providers relating to their mortgage conditions and mis-calculations of what is left owing on their mortgage.
Brochures designed to generate sales inevitably paint products in a positive light but, in a ground-breaking victory for a ‘buy to let’ borrower, the Court of Appeal has emphasised that they can create binding commitments that may prevail over inconsistent contractual terms.
The borrower had taken out a 25-year ‘tracker’ mortgage with a building society. The mortgage offer stated that interest on the loan would be fixed at 6.29 per cent for a certain period and, thereafter, at 1.99 per cent above the Bank of England base rate. However, the mortgage contract itself stated that the interest rate could be varied by the lender at any time and that the loan was repayable in full on the lender giving one month’s notice, with or without default by the borrower.
The borrower’s challenge to those terms of the contract was dismissed by a judge. In allowing his appeal against that ruling, however, the Court noted that his reasonable understanding that the interest rate would only fluctuate with the base rate was reinforced by the terms of the mortgage offer.
He also had a reasonable expectation that, save in the event of a default on his part, repayment of the loan would not be sought until the end of the 25-year term. In those circumstances, the disputed terms were inconsistent with the description of the product in the mortgage offer and were thus not incorporated in the contract.
