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Extended mortgages costing Abbey borrowers thousands extra

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by Elaine Frei
Extended mortgages costing Abbey borrowers thousands extra

Due to a miscommunication between Abbey and those having mortgages with the bank, thousands of homeowners will be paying off their mortgages for a total of 40 years rather than the 25 years they assumed was the term of their loan.

The bank did not notify those homeowners in the 1980s and early 1990s that it was extending the term of their mortgages as interest rates went higher. That course was taken instead of increasing the amount the homeowners paid on their mortgages each month.

The longer term of payments will cost those homeowners thousands of pounds extra in repayments.

The Financial Ombudsman Service has ruled that between 1987 and 1993 Abbey, which is a subsidiary of Banco Santander Central Hispano (IBEX-35: SAN; LSE: BNC; NYSE: STD), did not do enough to make it clear to customers that the term of their mortgage could change.

Because of this ruling, those affected by the extended term could receive compensation. The ombudsman has already handled several hundred such cases, and more continue to be submitted.

However, the ombudsman has now warned that it has set an October deadline for new cases to be filed concerning the matter.

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News posted: July 2, 2007

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