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Supreme Court ruling "marks a pivotal moment in mortgage lending"

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ended 06. June 2025

Brokers have said this week's Supreme Court ruling — Waller-Edwards (Appellant) v One Savings Bank Plc (Respondent) — regarding the use of mortgage funds could impact mortgage timescales, costs, affordability and create more red tape. The ruling will mean lenders will possibly have to reconsider how they monitor and underwrite any capital raising. Meanwhile, a legal expert has said the ruling, and others like it, “really highlight the importance of independent legal advice”. Views below.

7 responses from the Newspage community

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Michelle Lawson
Director at Lawson Financial
This ruling will mean lenders will possibly have to re-consider how they monitor and underwrite any capital raising. Financial domestic abuse does happen but it is sometimes hard to determine if this is in place as the individual concerned may be worried about repercussions for speaking out, so ends up going along with things. There is only so much we, as an industry, can do and some responsibilty has to lay at the door of the consumer to use any funds as they intended. However this can sometimes be hard to police and you have to rely on the goodwill of the borrower. Solicitors may be tasked to clear debts on behalf of the lender on debt consolidation cases, offer or completion pre-checks with all parties may come in to ensure all parties are aware of the task in hand. Post-completion checks may also be introduced to ensure funds have been appropriately used. What will be interesting is whose door this falls at, with the FCA currently reviewing scaling back the advice process .
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Chris Barry
Director at Thomas Legal
This example, and many others like it which didn’t make court or the public interest, really highlight the importance of independent legal advice. We speak to many clients and property professionals who view legal advice as both timely and expensive but it is critical for the client to understand what they are legally committing to. Some lenders already insist on their legal team to distribute funds as per the application, however these tend to be sub-prime or bespoke lenders. Most high street lenders require one transfer to a nominated account for the client to distribute the funds in accordance with their application. This has always puzzled me and this court ruling may encourage lenders to rethink this approach.
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Sean Horton
Managing Director at Respect Mortgages
This Supreme Court ruling creates a minefield for lenders and brokers alike. Banks now face a strict "bright line test" whenever any portion of a joint mortgage pays off one borrower's individual debts, however small. We'll see longer processing times and more complex documentation requirements. Debt consolidation cases that previously sailed through underwriting will now trigger additional safeguarding protocols. I believe that solicitors are best placed to become the frontline defence, conducting more detailed client interviews to satisfy lender concerns about undue influence, and knowledge of what the extra money will be spent on. I feel for OSB actually. I'm not sure what they did wrong.
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Rob Peters
Principal at Simple Fast Mortgage
The Supreme Court's decision marks a pivotal moment in mortgage lending concerning 'hybrid' transactions where loan proceeds benefit one party more than the other. Lenders are now obligated to exercise greater diligence, ensuring that all parties, especially those potentially disadvantaged, receive independent legal advice. For intermediaries, this ruling necessitates a more thorough assessment of client dynamics and the purposes of loans. Solicitors, too, will likely see an increased responsibility in verifying that clients are fully informed and consenting without undue influence, potentially dragging out the legal process further and increasing cost to clients. While this may introduce additional steps in the lending process, the aim is to ultimately foster a more transparent and equitable system and safeguard clients from potential financial abuse. It is the practical application that will be interesting where we will see the impact on mortgage timescales, costs and 'red tape'.
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Stephen Perkins
Managing Director at Yellow Brick Mortgages
This judgement will likely result in changes to lenders' approach in two key areas. Firstly, in the case of mortgages with conditions where funds are to be used to pay off existing debts on completion, it will likely be required for the solicitor to discharge those conditions directly. Secondly, where the funds being raised are more beneficial to one party than the other, there could be more checks required or maybe even independent legal advice for the secondary applicant. Hopefully we will not see more lenders stop disregarding consolidated debts from affordability.
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Tony Redondo
Founder at Cosmos Currency Exchange
The ruling’s ripple effects extend beyond lenders, intermediaries, and solicitors to the wider property market. While the ruling enhances borrower protections, it risks overcomplicating the lending process, potentially stifling the property market. Property developers and estate agents may see slower sales cycles due to prolonged mortgage approvals. Lenders may overcorrect by imposing excessive checks, alienating legitimate borrowers, and driving up costs. The emphasis on human-led due diligence is positive, but without clear regulatory guidance, implementation could be inconsistent, favouring larger lenders with deeper resources. Additionally, the ruling’s focus on non-commercial relationships may unfairly burden personal loans while leaving commercial mortgages less scrutinized, creating an uneven playing field. Policymakers should clarify expectations to balance consumer protection with market efficiency.
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Kundan Bhaduri
Entrepreneur, Investor and Landlord at The Kushman Group
This week’s Supreme Court ruling on Kent Reliance is a judicial slap in the face to mortgage lenders who’ve long operated on a “don’t ask, don’t know” basis when it comes to borrower dynamics. The court’s message is crystal clear: if part of a joint loan benefits only one party, paying off personal debts, for instance, that’s a red flag for undue influence, and lenders must follow the Etridge protocol, like it or not. All this will result in is more delays, more legal fees, and a fresh round of compliance gymnastics that could clog already strained mortgage pipelines. For those of us delivering homes on the ground, this is yet another layer of lawyer-led nannying that risks paralysing transactions under the guise of borrower protection. If banks need judges to remind them that coercion exists outside TV dramas, we’ve got bigger problems than affordability stress tests, you see.