DRN-3955250 – Treatment of a £100 overpayment; complaint upheld and interest to be adjusted
What happened: An interest-only mortgage taken out in 2007 with another lender transferred to Rooftop Mortgages in April 2019. The borrower made a £100 overpayment which was not applied to the capital balance, because Rooftop required overpayments of at least £1,000 to be applied to capital. The Ombudsman upheld the complaint, finding the mortgage offer permitted smaller overpayments and that Rooftop had not validly varied the contract terms.
What the Ombudsman decided: Complaint upheld. Overpayments to be applied in line with section 11 of the mortgage offer and backdated, interest adjusted, any interest overpaid refunded with 8% simple interest, and £200 paid for distress and inconvenience.
The published decision records that the complaint was upheld.
What mattered to the Ombudsman
- What the original mortgage offer actually said about lump sum payments, rather than the servicer's later threshold
- That a welcome letter after a transfer did not explain that a contract term was being varied
- That no amended terms had been provided to the borrower
These are the factors this particular decision treated as important. Ombudsman decisions are not precedent and another case can turn out differently.
What this does not prove
It does not establish that every overpayment must be applied to capital. It turns on the wording of this borrower's mortgage offer and on the absence of a valid variation.
Source details
- Source type
- Financial Ombudsman Service decision
- Source
- Financial Ombudsman Service, final decision DRN-3955250 (Ombudsman: Thomas Brissenden)
- Date
- 8 March 2023
- Reference
- DRN-3955250
- Mortgage type
- Residential
- Jurisdiction
- United Kingdom
- Organisations
- Rooftop Mortgages Limited
- Source quality
- Official source
- Last checked
- 2 September 2026
- Added
- 2 September 2026
What happened
An interest-only mortgage taken out in 2007 with another lender transferred to Rooftop Mortgages in April 2019. The borrower made a £100 overpayment which was not applied to the capital balance, because Rooftop required overpayments of at least £1,000 to be applied to capital. The Ombudsman upheld the complaint, finding the mortgage offer permitted smaller overpayments and that Rooftop had not validly varied the contract terms.
What the borrower complained about
The borrower said his £100 overpayment, and earlier payments, should have been applied to the outstanding capital balance, and that as a result he had paid more interest than he should have.
What Rooftop said
Rooftop said the original terms and conditions permitted a partial repayment only where the payment was at least £5,000, that its own threshold of £1,000 was more favourable, and that a welcome letter sent when the mortgage transferred explained how overpayments would be applied.
What the Ombudsman decided
The Ombudsman found that section 11 of the mortgage offer allowed lump sum payments of up to £5,000 in a 12-month period without an early repayment charge and set no minimum, and that Mortgage Rule 6.2 was relevant only to payments over £5,000. He found Rooftop had not attempted to vary the terms: the welcome letter did not explain that a variation was being made, and no amended terms were provided.
Outcome
- Complaint upheld. Overpayments to be applied in line with section 11 of the mortgage offer and backdated, interest adjusted, any interest overpaid refunded with 8% simple interest, and £200 paid for distress and inconvenience.
- Backdated application of overpayments to capital, adjustment of interest, refund of any overpaid interest with 8% simple interest added, and £200 for distress and inconvenience.
- Amount stated: £200 compensation, plus refund of any overpaid interest with 8% simple interest
Key extracts
“I don't think it is fair that Rooftop Mortgages failed to provide notice that this term was being varied and that it was making a change to the contract terms.”
Ombudsman, provisional decision quoted in final decision DRN-3955250
Why this record may be relevant
This decision concerns the treatment of overpayments and the recalculation of interest following a portfolio transfer.
Source
Financial Ombudsman Service, final decision DRN-3955250 (Ombudsman: Thomas Brissenden)
View original sourceThe date shown is the date stated in the published decision by which the consumer was required to accept or reject it. Rooftop accepted the Ombudsman's provisional decision.
If you believe this record is inaccurate or incomplete, see corrections and right of reply.