Unfair terms in mortgages

This content applies to Scotland only.

Housing laws vary between Scotland and England. Get advice relating to England

If your mortgage contract contains unfair terms or terms that are written in a deliberately confusing way, they may not be legally enforceable. This page gives examples of unfair terms, and explains what you can do if you think your contract may be unfair.

What are unfair terms?

An unfair term in a mortgage contract is a term which:

takes away any of your legal rights
places an unfair obligation on you to do (or not do) something
makes the contract far more favourable to the lender than it is to you.

Mortgage lender can (and will) include terms to protect their own interests, but these terms should take your interests into account too.

What if I don't understand the terms of the contract?

Contract terms should be written in plain English. If any of the terms in your contract are written in complicated jargon and their meaning is unclear, they could be considered to be unfair. The lender may need to use some technical terms in the contract, but these should always be explained.

Examples of unfair terms

A term that allows the lender to vary the interest rate without giving you any notice.
A term that allows the lender to vary the interest rate without good reason (a good reason could be because the interest rate tracks the bank base rate, and this rate has changed, or because a fixed rate has ended, which you agreed to when you took out the mortgage).
A term that allows the lender to vary the contract so that it can never benefit the borrower.

What should I do if I think a term is unfair?

Unfair terms are not legally enforceable. This means your lender cannot expect you to keep to them. If you think your mortgage contract contains any unfair terms, you should first raise the issue with your lender. If you're not happy with their response, contact Consumer Direct for advice on taking your complaint forward.