Think you've got a tracker without a 'collar'? - BEWARE

thetigerwhocametotea

Thought I had thoroughly checked our mortage ensuring there was no 'collar' on it because it states clearly on our mortgage offer (word for word):

"After 31 December 2008 your loan reverts to the society's variable rate which is the same as the BofE base rate plus 0.99% until the term end".

So thinks I, it will revert to 4.5% (if things stay as they are) plus 0.99% = 5.49%. Can handle that, quite happy. Seems clear enough. No mention anywhere that there is a collar on what rate it will track, so I could be in for a good deal here if the BofE base rate drops again..........

But I've now found a separate paragraph pages and pages away which says "We can vary the interest rate specified on your offer (excluding any fixed rate period) for any valid reason if we give you at least two month's notice in writing and allow you, if you should wish, to repay the loan in full without paying an early repayment charge blah blah blah."

Does this mean that basically they can please themselves whether they track the BofE rate or not and we can sod off if we don't like it? Not sure what they would class as a 'valid reason'? !!

Hope I'm wrong, but fear I am not. Anyone else come across something like this?

Sooler

it states 'valid' reason, not 'any' reason, ask them for a definition of 'valid'

lisyloo

My mortgage says it has to be redeemed at any time "on demand", which means they can "call in" your mortgage whenever they want.

Up until the recent banking crisis I would have said this was inconceivable.