National Westminster Bank PLC · DRN-6135302

The complaint Mr G complains that National Westminster Bank PLC is unfairly applying an early repayment charge when he repays his mortgage. He says this will leave him with a shortfall debt when he sells the property. Although the mortgage is in joint names, the complaint has been brought to us by Mr G alone. What happened Mr G took out a mortgage with NatWest in 2022, jointly with a third party (who I’ll refer to as Ms M). They took out a five-year fixed rate product. The account has been in arrears since mid-2024. Mr G wants to sell the property to clear the debt. He says he received an offer for the property. However, the sale proceeds won’t be enough to repay the mortgage balance and the ERC. Mr G asks that NatWest waives all or part of the ERC. Mr G says neither he nor Ms M has capacity to repay any shortfall. He says he won’t proceed with the sale if there’s a shortfall debt. He asks that NatWest agrees to write off all or part of the ERC. NatWest says the mortgage debt – including the ERC must be paid in full before it will close the mortgage account. Mr G says in these circumstances it’s unfair and disproportionate for NatWest to apply the ERC, and this doesn’t benefit any of the parties. Our investigator said Mr G agreed to the ERC when he took out the product. He said it wasn’t fair and reasonable in the circumstances to require NatWest to waive it. Mr G didn’t agree. He said the issue is whether it’s fair and proportionate for NatWest to apply the charge. What I’ve decided – and why I’ve considered all the available evidence and arguments to decide what’s fair and reasonable in the circumstances of this complaint. When Mr G took out the mortgage and five-year product he agreed to its terms, including that an ERC would apply if he repaid the mortgage during the product term. The ERC (including the percentage and when it applied) was clearly set out in the mortgage offer in the form of a table. I think NatWest is entitled, under the mortgage terms and conditions, to apply the ERC if the mortgage is repaid during the product term. Mr G says his complaint isn’t whether NatWest is contractually entitled to apply the ERC. He says his complaint is that NatWest applied the ERC rigidly and without proper consideration of forbearance, proportionality, or loss-mitigation, in circumstances where doing so: • actively frustrates the best and only realistic recovery outcome available to NatWest; and

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• materially worsens NatWest’s own financial position. The mortgage offer issued in 2022 assumed a property value of £400,000. Mr G says the property is in poor condition and its unlikely they’ll get a better offer than the one they’ve received (of £362,000). The mortgage account is in arrears of about £40,000. Only one payment has been received into the mortgage account since March 2024. Unpaid interest has increased the debt owed by about £20,000. In December 2025, the redemption amount was about £368,000. If the property had been sold in December 2025, Mr G would have had to pay the shortfall of about £6,000 to redeem the mortgage. In December 2025, when Mr G raised his complaint with NatWest, the ERC was 4% of the balance, meaning the ERC was about £14,000. Since February 2026 the ERC has been 2.5% of the balance, meaning the ERC is about £9,000. However, the mortgage balance will have increased if interest accrued since December 2025 hasn’t been paid. Mr G says his financial circumstances meant he’s been unable to make mortgage payments since 2024. I’d expect NatWest to respond fairly and sympathetically when a customer has financial difficulties or is vulnerable, and consider what support it can offer. That doesn’t mean it has to write off all of part of the debt. Mr G says he won’t go ahead with the sale if it would result in a shortfall debt. He says this would leave NatWest in a worse position than if it waives all of part of the ERC to allow the current proposed sale to complete. It’s possible there’d be a larger shortfall if NatWest takes possession and sells the property. There would be legal costs (which NatWest would be entitled to add to the mortgage account), it’s likely further arrears would accrue during the process and a sale in possession might not achieve a better, or even the same, sales price. NatWest would be entitled to try to recover any shortfall debt from Mr G (and/or Ms M, as they are jointly and severally liable for the mortgage debt). Ultimately, it’s for NatWest to make a commercial decision whether to waive or reduce the ERC, as Mr G requests. And it’s for Mr G to decide whether to proceed with the sale and pay the shortfall, or risk being liable for a larger shortfall in future. I’ve considered carefully the reasons given by Mr G as to why he thinks NatWest should waive all or part of the ERC. I’m sorry to disappoint him, but I don’t think it’s fair and reasonable to require it to do so. I don’t think NatWest made an error or acted unfairly when it said the mortgage debt – including the ERC – would have to be repaid in full. My final decision My decision is that I do not uphold this complaint. Under the rules of the Financial Ombudsman Service, I’m required to ask Mr G to accept or reject my decision before 7 April 2026. Ruth Stevenson Ombudsman

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