Mortgage underfunding

Mortgage underfunding occurs when mortgage payments aren’t set up on the correct basis, meaning the customer isn’t paying enough – usually without realising. The customer is then faced with paying back more than they expected, or over a longer period.

Often, the people who contact us aren’t sure how or when the problem happened. Here are some examples of what people tell us:

• I was just paying the amount my lender told me to pay – the underfunding isn’t my fault
• I made a mistake, but my mortgage company won’t help me put things right
• My mortgage broker made a mistake – now I’m being told I haven’t paid enough on my mortgage
• I mistakenly set up a standing order for less than the required monthly payment
• My mortgage broker gave me the wrong information and I’m not sure who’s responsible for putting things right

We’ll take into account:

• how the mistake with repayments came about and who’s responsible for it – whether that’s the mortgage lender, a broker or you
• the information provided to you about the repayments – both at the start of the mortgage and later on, if the repayments changed
• whether it’s reasonable that you could have known you weren’t paying enough
• whether you could have taken steps to sort the problem out sooner
• whether the mortgage lender or broker could have picked up on any problems at the time

Talk to your lender or broker. They need to have the chance to put things right. If you can’t reach an agreement then you can make a formal complaint to them. They have to give you their final response within a specified time limit.

After that, if you’re still unhappy you can get in touch with us – we’re here to help.

Find out more about how to complain.

We’ll check that your lender or broker acted fairly when the problem was reported, even if it was your mistake. For example, we’ll check whether your lender’s worked constructively with you to set up a reasonable plan for dealing with the underfunding.

In the following underfunding situations, this is how we’re likely to put things right:

• If the mortgage company made the mistake – and you couldn’t have known – we generally tell them to rework the account as if the correct payments had been made. This could mean writing off the extra money – or some of it, if we think you could have realised sooner.
• If someone else (such as a broker) made the mistake, they won’t be able to restructure your account. But we can tell them to pay the money to your mortgage account instead.
• If you made the mistake, perhaps by setting up a standing order for the wrong amount, we’re unlikely to tell the lender to write off the money. However, we’ll encourage them to work with you to arrange a fair way to get the money paid back.
• If you knew – or should have known – your lender had made a mistake but you carried on paying the wrong amount, you’ll probably be responsible for paying the outstanding balance. If you didn’t tell your lender as soon as you noticed a mistake, we might tell the lender to meet the underfunding only up to the point you noticed the mistake.

Search our decisions database to see our past decisions on complaints involving mortgage underfunding.

If you're a business looking for information to help you resolve complaints, find out more in our detailed information about handling complaints about mortgage underfunding.