The Financial Ombudsman Service has said that it is getting between 400 -500 mortgage under-funding cases a year, where borrowers complete the term, but have not cleared the loan.
Mortgage under-funding is where borrowers are paying the full repayment amount stated by their lender, but find later that the lender quoted an insufficient monthly amount.
The ombudsman has warned that it can often be several years before anyone realises that something is wrong, and by then borrowers may have paid off much less of their mortgage capital than they thought. The FOS has said that cases usually come to them when lenders have not followed the correct procedures.
The four most common ones are -using out of date compensation tools, accounting for periods of mortgage arrears, accounting for capital repayments and overpayments, and changes in a customers circumstances.
Our view
Lenders making errors on calculations should be brought to task. It is ridiculous that a lender would let their mistakes make it as far as an Ombudsman complaint.