Santander UK Plc · DRN-6020893

The complaint Mr O and Ms A complain that Santander UK Plc declined their application to port or transfer their mortgage to a new property and raise additional funds. As a result they incurred an early repayment charge (ERC) and are paying a higher interest rate on their mortgage. What happened In August 2021, Mr O and Ms A took out a mortgage with Santander. In January 2024, they took out a new interest rate product. It had a fixed rate of 4.92% until 2 June 2026 – an ERC applied if the mortgage was repaid before that date. In September 2024, Santander agreed an application in principle for Mr O and Ms A to port their existing mortgage and to borrow an additional amount. But Mr O and Ms A were unable to proceed with that as they’d not sold their home. In December 2024, Mr O and Ms A told Santander they’d now had an offer accepted on their property and were ready to proceed. But Santander said the initial application had been cancelled. In January 2025, Santander declined the application because Mr O had not been self-employed for at least two years. Mr O and Ms A repaid the Santander mortgage and took out a mortgage with another lender, incurring the ERC. Mr O and Ms A complain that Santander has not treated them fairly. They said Santander made the decision so it did not have to honour the lower interest rate and could apply the ERC. They said Santander made the process difficult and caused delays. They want Santander to refund the ERC and pay them the difference in interest rates – along with compensation for the inconvenience this matter has caused them. The investigator did not think the complaint should be upheld. Mr O and Ms A did not accept what the investigator said. They responded to make a number of points, including: • Mr O was never self-employed. He was a full-time employee. • All the information they submitted about their salary was submitted at the time of the decision in principle. It was correct to the best of their knowledge and did not change between then and the full mortgage application. Santander should have declined the application at the decision in principle stage if there were issues with affordability or meeting its lending criteria. • Mr O’s salary was around four times higher than it was when it initially approved the mortgage and Ms A’s salary remained the same. Their outgoings had not increased between those times. They find it very unlikely that they did not meet Santander’s lending criteria or affordability assessment if it had been applied fairly. That is supported by the fact they were able to get a mortgage from another high street bank who was known for having very stringent lending criteria.

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• They had provided evidence of significant savings that would have covered the mortgage payments for years. • The loan to value on the new property would have been the same or lower than the previous property. It was ridiculous that Santander would view them as a higher risk. • Santander closed the initial application against their wishes and after telling them it would not do so. Had they not done that, they would have been able to verify that they did meet its criteria. Because of that error they did not have enough time to appeal. • They were happy to provide updated proof of income, but Santander should have allowed it to be done on the initial application – a new application was not required. • They disagreed that if the application had not been cancelled it would have been likely that Santander would refuse to lend. • They understood Santander could set its own lending criteria, but it has not applied it fairly and we should therefore investigate and address that. • Santander agreed it made errors. • They wanted the difference in rates along with a refund of the ERC. 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. Mr O and Ms A were not simply transferring their existing borrowing to a new property. They wanted to borrow more money. Santander was therefore entitled to assess the application as it would for any other mortgage application. While the offer that Mr O and Ms A accepted said that they had the right to transfer the mortgage to another property, it also said they “must meet [Santander’s] lending criteria and pass [its] affordability assessment at the time.” Santander has provided a copy of its lending policy in respect of people employed through umbrella companies. It says that Santander needs evidence of income for two years from that source. As Mr O was unable to provide that information it was reasonable for Santander to decline the application. It is up to Santander to decide what its appetite for risk is – and I wouldn’t usually interfere in that. I don’t consider it has applied its policy unfairly in the circumstances here. It has applied it in the same way it would for any customer. Mr O has told us that he was not self-employed and was a full-time employee. But the application he submitted to Santander said he was on a fixed term contract that started in 2023 and that was through an umbrella company. So I am satisfied that Santander was entitled to apply its policy in the way it did. The full information about Mr O’s employment did not come to light until the full application was made. And even if it had been picked up at an earlier stage, Mr O and Ms A would still have found themselves in the same position. The fact that the initial decision in principle lapsed made no difference to the outcome here. That was only an indication that Santander would be prepared to lend subject to a full application. So Mr O and Ms A would still have encountered the same problem if they’d made a full application on the first decision in principle. I understand Mr O and Ms A’s view that the new borrowing was significantly less risk for Santander. But as I have explained, that is for Santander to judge, not me – and I am

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satisfied it applied its policy fairly. Different lenders have different lending policies and appetites for risk. Just because one lender approved a mortgage application does not mean another lender acted unfairly by declining it. And I note that Santander did offer Mr O and Ms A the chance to formally appeal its decision, but they decided not to. I understand they thought they did not have time to do so – but that was their choice. I accept Santander said the initial application could be reactivated. But Mr A and Ms O did not return to Santander for more than two months. I’m not sure the information Santander gave Mr O and Ms A was an unequivocal guarantee that the application would be able to be reactivated indefinitely. And as I have found, the fact a new application was started made no difference to the outcome of the application. I appreciate Mr O and Ms A’s position and why they have pursued this complaint. But I don’t think that Santander treated them unfairly. Therefore I can’t tell Santander to refund the ERC or the difference in interest rates. The ERC has been applied as set out in the mortgage offer that Mr O and Ms A accepted. My final decision My final decision is that I do not uphold this complaint. Under the rules of the Financial Ombudsman Service, I’m required to ask Ms A and Mr O to accept or reject my decision before 20 April 2026. Ken Rose Ombudsman

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