Does Halifax owe us more compensation?

Q In September we took out a 25-year mortgage with Halifax, initially fixed for two years. Our mortgage indemnity guarantee (Mig), a fee charged by lenders where the mortgage is a high percentage of the value of the property, was to be added to the mortgage along with our arrangement fee.

When interest rates rose late last year we were surprised to find that ours did too. When we complained, we discovered that the Mig and arrangement fee were indeed added to our mortgage, but at a variable rate of interest. Our statements have no interest rate information on them, so were unaware of this.

We complained to Halifax, who does not accept responsibility, but is prepared to give us ?150. I am tempted to go to the Ombudsman, as information about the fees being charged at the variable interest rate was never discussed with us.

LF

A Tut, tut, Halifax - the Mortgage Code (to which Halifax certainly subscribes) clearly states in section five, paragraph three:

'Before you take out a mortgage and at any time you ask, we will: tell you the interest rates which apply to your account(s) and will explain when interest is charged (for example, on the outstanding mortgage balance at the beginning of each year); tell you whether the interest rate may be varied.'

It sounds as if Halifax never bothered mentioning that your Mig and arrangement fee would attract a different rate of interest from your mortgage, and there's certainly no reason for you to suspect that it would. You need to check your mortgage documentation carefully - if there is no mention of these two fees being charged at a different rate of interest, Halifax is in breach of the Mortgage Code.

You could certainly complain to the Ombudsman about this but it might be worthwhile complaining first to Halifax again, in writing, quoting the relevant section of the Mortgage Code and explaining that you want the situation redressed. In other words, you want both fees to be charged at the same rate as your mortgage and any overpayment of interest as a result of being charged a standard variable rate refunded within 14 days.