Help needed x any advice

[Bemused33]

I 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

Did your parents never get annual statements showing how much they'd paid and how much was outstanding? If not, that's something you can take to the ombudsman. Whereas, if they've had regular statements, they'll find it more difficult to argue that the bank should compensate them for anything beyond the original mistake.

yes they did but they did not understand them. :( he assumed the balance would have gone by the time the term ended.

Surely he must have noticed that his repayments were lower after the 3 month period than they had previously been?

How much was the 'paltry reduction'?

From what you say I don't think they have a leg to stand on unfortunately . Basically what Cogito says. If they've had statements for years showing balances and interest rates applied, type of mortgage, term remaining etc, the bank will take the view that they've had plenty of opportunity to notice the mistake and it was their responsibility to check the statements. Harsh I know.
I think they'd be better off on focussing on how to move from here and what options they have for owning the house outright at some point. I'm not sure what those options are and perhaps they should see an independent financial adviser.
Good luck though

Agreeing with the PP they're probably best advised to think less in terms of compensation now and instead try to find a way to cover the £20,000 shortfall. If they're (understandably) hacked off with their current lender, they might want to consider remortgaging with a new lender and could even get a better deal potentially. An independent financial adviser or mortgage broker could be useful there.

My first thought would be trying to use 'help you have really landed us with a problem' to try to get an excellent rate mortgage from their current lender.