I couldn’t transfer due to mental health issues. Can I get compensation? DAVID HOLINGWORTH replies

I have significant mental health problems and that is why I have not taken out a new mortgage.

I have had a lot of equity in my house for years and now only owe £14,000.

If I had taken out a new mortgage, I could have gotten a much lower rate. Instead, I have stayed on my lender’s standard variable rate, which is much higher and has cost me tens of thousands in interest.

Can I take my lender to court for damages?

SCROLL DOWN TO FIND OUT HOW TO ASK DAVID YOUR Mortgage question

David Hollingworth replies: While a mortgage is typically for a term of 25 years or even longer, it’s not something you can leave alone if you want to get the best value.

Although it is possible to get mortgages where the interest rate is fixed for the life of the loan, the majority of borrowers will enter into an agreement that is valid for two to five years.

Once the initial two- or five-year fix is ​​over, the mortgage transitions to a reversionary interest rate.

– Is a five-year fixed mortgage the best option as interest rates will remain higher?

Normally this is the lender’s standard variable interest rate (SVR). These are generally a lot higher than the rates they could get if they were to look for a new permanent deal.

Failure to take action could cost an average borrower thousands of pounds per year as the SVR can often be above 8 percent and in some cases even more than 9 percent.

Despite the higher interest rates in today’s market, five-year fixed interest rates for those with a large amount of equity could be below 4.5 percent. So you can see how big a difference that could be.

If we went back far enough, lenders wouldn’t have been quick to offer offers to existing customers to move on. Often borrowers would then drift towards SVR without another option being offered.

Fortunately, that has changed and lenders are now proactively offering existing customers a range of deals that they can switch to at the end of their solution.

This has been the case for some time, so your lender may have contacted you from time to time about the options for refinancing your mortgage.

Even if you weren’t, you’ll have had a chance to see what your lender may have offered you, either by checking online or by getting in touch.

If mortgage payments have been kept up to date and there is no change to the mortgage amount, lenders will not require new affordability checks so they do not have to contact you directly about your mortgage.

Lenders must be ‘eager to help’

Although there is not enough information here to assess how you may have suffered damage and it is difficult to indicate how the lender may be liable for compensation, you can of course always make a complaint if you feel that you have been wronged.

Banks and building societies will outline their complaints procedure online, but you can make a complaint in the way that works best for you: via a phone call, a branch visit or in writing.

They will then investigate and get back to you with an answer within a certain period of time. If you are not satisfied with the outcome of the complaint, you can refer it to the Financial Ombudsman.

Thank you for sharing the information about your mental health. I don’t know if you have informed your lender of this, but it is something to think about as they can offer you additional support.

Last year, a new set of rules on consumer rights came into force.

This makes it very clear that financial institutions need to deliver good outcomes for all customers, and that includes customers who may be more vulnerable or susceptible to harm or damage. As a result, consumers will find that their bank is eager to understand how they can help.

Now take a look at the mortgage and see whether you have the correct interest rate.

The fact that your mortgage is small means that you have to take possible costs into account.

Some rates may look lower, but if there is a high fee involved, it will incur significant costs during the deal period. There may be free options that are likely to be better value.

Moving to another lender is also likely to involve some other costs, so it’s probably better to stay with your current lender.