Fixed Rate Decision Reference 2023-0016

Case OutcomeRejected
Date27 January 2023
Subject MatterFixed Rate
Finantial SectorBanking
Conducts Complained OfFailure to provide calculations,Delayed or inadequate communication
Decision Ref:
Product / Service:
Fixed Rate
Conduct(s) complained of:
Failure to provide calculations
Delayed or inadequate communication
This complaint concerns a mortgage account.
The Complainants’ Case
The Complainants submit that their main issue is with the Provider’s method of calculating
Loan-To-Value (“LTC”) ormore specifically, the lack of information provided by (the
Provider) regarding how they calculate LTV for self-build properties”.
The Complainants submit that they met with the Provider to discuss an application for a
mortgage and that prior to the meeting, they noted that “there was nothing on the
Provider’s website advising how LTV is calculated for self-builds”. The Complainants assert
that this “was one of our main queries going into the meeting”.
The Complainants contend that they specifically asked the Provider how LTV is calculated
for self-build properties and that they were informed by the Provider that “an auctioneer
would carry out 3 inspections during the course of the build and that the LTV will be based
on the final valuation”.
The Complainants state that the Provider subsequently advised them that in order:
to progress with the mortgage application, the value of the property will be based
on cost-of-construction plus the auctioneer’s first valuation (the value of the site) as
this was all that was available at the time; but once the final valuation is available it
would be used for LTV purposes and interest rates adjusted”.
- 2 -
The Complainants contend that at this point they were under the impression that interest
rates/LTV” would be altered on their mortgage account once the final valuation was
completed. The Complainants advise that they then “went ahead and signed the contracts”.
The Complainants submit that when the final valuation was completed on their property,
they contacted the Provider and requested that it adjust the interest rates on their
mortgage, in line with the new LTV, based on the final valuation. The Complainants further
submit that the Provider informed them that it would not be adjusting the interest rates as
it was “locked at the point of signing the contract”. The Complainants advised that they
raised a complaint with the Provider and that “the crux of their response is, that I signed
contract in presence of our solicitor, so basically it is ok from their point of view”.
The Complainants assert that when signing the contract in the presence of their solicitor,
they did not specifically raise the issue of LTV being adjusted upon the final valuation, as
they had already received this information from the Provider. The Complainants further
assert that additionally, nowhere in the loan offer documents is there any mention that LTV
is based on “cost-of-construction plus site value” and that “to the contrary, in the Mortgage
General Terms and Conditions, it clearly states that LTV is based solely on the auctioneers’
valuation alone”.
The Complainants contend that due to the information received from the Provider, and
having read the terms and conditions, they had no reason to doubt that LTV would be based
on the auctioneer’s final valuation. The Complainants state that:
despite the terms and conditions clearly stating value is solely based on the
auctioneer’s valuation, in case of self-builds, it transpires this is only partly true. [The
Provider] uses the initial site valuation, as valued by auctioneer, and add the cost of
construction to come up with the property value and the cost of construction is not
quantified by the auctioneer therefore, clearly contradicts what is in their own terms
and conditions”.
The Complainants submit that the Provider has “acknowledged that it is their standard
business practice to use Cost of Construction and site value for self-build LTV purposes”. The
Complainants assert that “surely, [the Provider] has a duty to declare this somewhere”.
The Complainants submit that having raised this point with the Provider that its reply was “I
am sorry if you feel this was not made clear to you and that you feel this should be specifically
referenced in documentation. We are not aware of if or where this would be specifically
detailed in the documentation to you.”
The Complainants point out that LTV calculations directly impact the rate of interest you
pay, yet the Provider is not “aware of if or where this would be referenced”.

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