Woolwich change variable rate terms and conditions as fixed rate comes to an end

busybee100
busybee100 Posts: 1,530 Forumite
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in Mortgages & endowments
I had notification from the Woolwich just before Christmas that the variable rate to be applied will be 4.49% above base when my current 5 year fixed rate term finishes (July?).

When I took out the mortgage the variable rate stated was 0.50% above base.

Is it allowed for them to change my terms and conditions?

I do understand from their point of view why they have done this but as I've been paying over the odds for the last two years I was hoping to recoup some of that when the fixed rate (4.89%) term finished.

Should I challenge the Woolwich?

Bx
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Comments

  • opinions4u
    opinions4u Posts: 19,411 Forumite
    Take a look at this thread.

    Somebody else had the same fears as you and then realised it wasn't quite as bad as they initially thought.
  • busybee100
    busybee100 Posts: 1,530 Forumite
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    Thanks for the link opinions4u.

    Currently I agree with some of it and have a different understanding to other parts.

    Yes it currently only affects people using the reserve or already on SVR but (as I understand it) at the end of the fixed term it will kick in for the repayments.

    I'll go read my T&Cs

    Bx
  • blueberrypie
    blueberrypie Posts: 2,395 Forumite
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    busybee100 wrote: »
    Thanks for the link opinions4u.

    Currently I agree with some of it and have a different understanding to other parts.

    Yes it currently only affects people using the reserve or already on SVR but (as I understand it) at the end of the fixed term it will kick in for the repayments.

    I'll go read my T&Cs

    The vast majority of Woolwich mortgages go onto a tracker rate at the end of the fixed-rate period - *not* SVR. From what you've said, I suspect that's the case for your mortgage. If that's correct, your mortgage rate will be 0.5% above base rate.

    For all of those on base-rate tracker mortgages, the SVR change only affects borrowing from the Mortgage Reserve Current Account - *not* the original mortgage itself.
  • busybee100
    busybee100 Posts: 1,530 Forumite
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    Thanks for your reply blueberrypie (love your username).

    I think this is the relevant part of my mortgage offer

    4.Description of this mortgage

    Lender: Barclays Bank PLC

    Product: 4.89% S&S Fixed until 30/09/2010(YT1): A fixed rate of 4.89% until 30/09/2010. After 30/09/2010, the rate will be Barclays bank PLC Standard Variable Rate, currently 6.79%, for the remainder of the term.
    Following an interest payment change,your monthly payments will be amended at the first available monthly payment date.

    Tied products: You are obliged to take out a linked current account through Barclays Bank PLC as a condition of this mortgage. Please refer to section 12 of this offer document for further details.

    Other restrictions: This offer is only available for customers re-mortgaging from another Lender.

    This does mean they are changing my T&Cs doesn't it? My repayments will go up at the end of the fixed term? Unless of course the base rate drops into negative values.

    Thank you for your advice.

    Bx
  • SLAMMER_2
    SLAMMER_2 Posts: 35 Forumite
    nothing has changed, the rate is still 4.99.

    It actually benefits people who are on the svr as previously the bank could change the svr by less or more than what the bank of england did. It never was guaranteed to be 0.5% above the base rate. It was woolwich svr which they could change as they saw fit.

    Now you have the guarantee of tracking the base rate by 4.49.

    Its better for you.
  • joolley
    joolley Posts: 100 Forumite
    edited 2 January 2010 at 1:19PM
    busybee 100, according to the bit of your mortgage T&Cs, if the SVR was 6.79 when you took out the mortgage, then it was not 0.50 above base. I do not recall base ever being 6.29.

    It does not appear to me as if the T&Cs are being changed, but I'm sure someone more sensible will pop in to correct me if I am wrong.

    joolley

    EDIT: It does look as if your rate will go up from 4.89 to 4.99 after your fix rate ends as your T&Cs says you go to SVR afterwards. Had rates remained exactly as they were when you took the mortgage, your payments would have still gone up, but to 6.79. But that is if you go on the SVR and not some other lower rate as other folk on here have suggested would happen.
    Keep it simple and you will find the middle way.
  • busybee100
    busybee100 Posts: 1,530 Forumite
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    joolley wrote: »
    busybee 100, according to the bit of your mortgage T&Cs, if the SVR was 6.79 when you took out the mortgage, then it was not 0.50 above base. I do not recall base ever being 6.29.

    Yes I agree, when I was typing it out I was thinking "where did I get the 0.5% from" I have had a look at the BofE base rates and it looks as if the SVR was about 2% above base.

    Section 5. Overall cost of mortgage gives projection figures but says 'the figures in this section will vary following interest rate changes and if you do not keep your mortgage for 20 years'.

    Therefore I believed as the rates had gone down the SVR would go down as well.
    I think what I'm getting hung up about is that for the last two years I have chosen not to change my mortgage and incur a penalty because I believed I would benefit at the end of the fixed term. I feel as if they have moved the goal posts.

    Thank you for both for your replies - it is good to get other peoples perspectives on this.

    Bx
  • SLAMMER_2
    SLAMMER_2 Posts: 35 Forumite
    they haven't moved the goal posts though. The rate you go onto is exactly the same and gives you greater security that it won't change anymore than the bank of england base rate.

    If you don't want to go onto the svr then you can get preferential fixed rates as an existing customer, much lower than your current fixed rate.
  • busybee100
    busybee100 Posts: 1,530 Forumite
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    SLAMMER wrote: »
    they haven't moved the goal posts though. The rate you go onto is exactly the same and gives you greater security that it won't change anymore than the bank of england base rate.

    It is exactly (4.89%/4.99%) the same now, but how long before the base rate goes up? Do you mean greater security as in the SVR will always be 4.79% above the BofE base rate? I'm horrified at that thought.
    SLAMMER wrote: »
    If you don't want to go onto the svr then you can get preferential fixed rates as an existing customer, much lower than your current fixed rate.

    I have only been informed of the change in how the SVR will be calculated. I would be grateful for more information about the preferential fixed rates is there anywhere specific I should go for more information?

    Thank you for your time.

    Bx
  • joolley
    joolley Posts: 100 Forumite
    edited 2 January 2010 at 6:10PM
    BB100, you're right. If rates go back to 4, the SVR will be an eye watering 8.45! Not sure if Woolwich intends to keep its BBBR at BOE + 4.45 in those circs. That or whether customers will stick to this follow on product. I am keenly watching this unfold because I don't know if these changes will extend to other products as well in due course.

    joolley

    Might be worth seeing an all of market broker to start looking at other products that may suit you.
    Keep it simple and you will find the middle way.
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