DRN-4702049 – Overpayment balance, interest rate rises and arrears charges; complaint not upheld
What happened: An interest-only mortgage taken out with Rooftop in 2006, fixed for two years and then reverting to LIBOR plus 4.1%. Payments from the borrowers and the Department for Work and Pensions cleared the arrears and built an overpayment balance, which was eroded from 2022 as interest rates rose and payments reduced. The complaint concerned the erosion of that balance, the interest rate increases and the charges applied, and was not upheld.
What the Ombudsman decided: Complaint not upheld.
The published decision records that the complaint was not upheld.
What mattered to the Ombudsman
- That the rate charged tracked LIBOR and its successor rates as the 2006 offer provided
- That the additional sum complained of was interest under the terms, not a charge
- That the arrears charges within the period considered had already been reversed
- That the correspondence set out consequences, which the Ombudsman said he would expect
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 decide whether the earlier charges or rate changes outside the service's time limits were fair; those periods were outside what could be considered.
Source details
- Source type
- Financial Ombudsman Service decision
- Source
- Financial Ombudsman Service, final decision DRN-4702049 (Ombudsman: Derry Baxter)
- Date
- 11 October 2024
- Reference
- DRN-4702049
- 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 with Rooftop in 2006, fixed for two years and then reverting to LIBOR plus 4.1%. Payments from the borrowers and the Department for Work and Pensions cleared the arrears and built an overpayment balance, which was eroded from 2022 as interest rates rose and payments reduced. The complaint concerned the erosion of that balance, the interest rate increases and the charges applied, and was not upheld.
What the borrower complained about
The borrowers said they did not accept that the overpayment balance notified in October 2022 had been used up by May 2023; complained about interest rate increases since 2017; said charges applied between 2019 and 2023 had made them mortgage prisoners; and said letters sent in December 2023 and January 2024 were aggressive and potentially harassing.
What Rooftop said
Rooftop said annual statements had shown the payments received since mid-2022 were less than the contractual payments and that the overpayment balance had been eroded; that additional interest was charged in line with the terms and conditions, held as a separate non-interest-bearing balance; and it reversed all charges applied since its July 2018 complaint response as a gesture of goodwill.
What the Ombudsman decided
The Ombudsman found the rates charged had fluctuated in line with LIBOR and its successor rates as the 2006 mortgage offer provided, and were not out of line with the wider market. He recorded that the additional interest was not a charge but interest chargeable at the reversionary rate on the arrears and fees balances. On the seven arrears management charges in the period he could consider, he noted Rooftop had already reversed them, so there was nothing further to require. He did not consider the correspondence inappropriate or harassing.
Outcome
- Complaint not upheld.
- No remedy directed. Rooftop had already reversed the arrears charges applied since June 2018 and had refunded £850 of arrears charges under a separate complaint response in July 2018.
Charges recorded in this source
| Charge type | Amount stated | Outcome | Interest recalculated |
|---|---|---|---|
| Monthly arrears management charges (seven, within the period considered) | — | Already reversed by the business before the decision; no further direction made | Not stated |
| Additional interest on arrears and fees balances | — | Found to be interest charged at the reversionary rate under the mortgage terms, held as a separate non-interest-bearing balance | Not stated |
Key extracts
“Rooftop applied seven monthly arrears management charges during the period I am able to consider. If I were to find that they were inappropriately applied, I would require Rooftop to reverse the charges. It has already done so.”
Ombudsman, final decision DRN-4702049
Why this record may be relevant
This decision concerns arrears charges, additional interest on arrears and fee balances, and interest rate variation under a LIBOR-linked reversionary rate.
Source
Financial Ombudsman Service, final decision DRN-4702049 (Ombudsman: Derry Baxter)
View original sourceThe date shown is the date stated in the published decision by which the consumer was required to accept or reject it. The service's jurisdiction was limited to the arrears and interest rate issues from 12 May 2017 and to fees and charges added from 8 June 2018.
If you believe this record is inaccurate or incomplete, see corrections and right of reply.