Woolwich Mortgate Reserve Account

robbin1

Hi, I took out a Woolwich Openplan mortgage via Barclays a few years ago and received a Mortgage Reserve of around £70,000. I've used it over the years and although my mortgage is now about a third of what it originally started out at, I've used £20,000 of the reserve. Both the outstanding mortgage balance and the £20,000 borrowed from the Reserve are charged the same interest rate, so I've been overpaying the mortgage, reducing that faster. However, Barclays have recently changed the Woolwich Mortgage Reserve to a Barclays Mortgage Current Account. They've written to say there are some important changes, but I can't work out what this means in terms of interest rates to be charged when the changes come into effect. It mentions changes to the SVR which will now track the BofE base rate, and says it will be calculated on the BofE base rate plus 4.49%. I'm currently charged less than 2% on both debts combined, minus what I have in my offsetting 'normal' Barclays current account.

Does anyone know.....Does this mean I'll be charged one rate for the outstanding mortgage and at least 4.49% for the £20,000 borrowed from the Reserve? They seem to be saying that it's now a current account which is overdrawn, so are they saying this account will now be treated as a normal current account which is overdrawn and charge their fees for using the reserve as an overdraft?

The Barclays website doesn't mention anything about the Mortgage Reserve Account in its Woolwich Offset blurb.

Any clarification or help appreciated.

Many thanks

Wilfieboy

We wrote to Barclays to ask when we were advised of changes to account as we had not received a letter. This is the reply we got:

Dear Mr and Mrs
In our previous letter, we promised to keep you updated on the progress of our investigation into your complaint. I have now completed my investigation and so can provide you with our full response .
From completing my investigation into the issue raised I am happy to confirm that your complaint has been upheld.
You’re concerned to have received correspondence from us which provided details of the changes due to take place with the interest on your Mortgage current Account (MCA). You have an Offset Mortgage and you were told that the interest rate on the MCA would mirror that on the mortgage. You would like to know when the decision to change the interest rate was taken and if this cannot be obtained you have asked us to point you in the right direction to find this information out. You feel that you should of been informed as you paid for this product back in 2004.
In response to above I would initially like to apologise for any concern and inconvenience caused and whilst I appreciate your comments I would like to assure you that all customer feedback is gratefully accepted . This in turn assists in our constant drive of aiming to provide a high level of customer service and satisfaction.
With this said I can confirm that the interest rate on the MCA will continue to mirror that of the mortgage for as long as you have an offset tracker on the main mortgage account. It has come to light that since the mailing was issued that in fact it failed to take into account our Offset mortgages. This is very disappointing to learn and once again I apologise for any worry this has caused.
The letter then goes on to say how seriously they take such a poor level of customer service etc.
We have now received another letter in the post stating the same changes as yourself. I paid £1,499.00 for that mortgage and they have now totally changed it

Wilfieboy

P.S I also have been on Woolwich website and it still states the reserve account rate will continue to mirror the other interest rates on accounts pooled with your offset mortgage. I received by letter the latest notice of changes in the post today

VIGILANT22

Woolwich/Barclays T&C's are "sneaky"

robbin1

Thanks very much Wilfieboy, I'm relieved to hear they made a mistake and the reserve account will continue at the same rate as the main mortgage. I'll have a read of the Woolwich site too now. Thanks for taking the time to reply.

Wilfieboy

No Robin. That's the problem I have received another letter today different to the above stating that the reserve interest rates will NOW be changing.

The letter typed out above I received roughly (not got it to hand) two weeks ago.

The one today states they now will be changing????

robbin1

So they ARE changing it? But I've cleared most of what I borrowed from the reserve but by paying it off the mortgage!

Surely they can't do this and only give a couple of months notice? The letter I quoted from came a few weeks ago and says the changes come into effect on 28.2.10 and also refers to an earlier letter (which I haven't had) so I'll be contacting them to see what on earth is happening. If you've received the same letter I had weeks ago only today, what is going on?

Like you, I paid to take this mortgage out and the terms offered, ie the Reserve, swayed my decision against others on offer!

Vigilant - are you saying it's likely that this change of interest rate is the case?

VIGILANT22

Just make sure you are in receipt of all your paperwork.......

getmore4less

The pooled accounts should remain on the Mortgage rate for offset mortgages.

It is the net lending that gets charged interest

It should work the same as the savings accounts that have an interest rates but you get nothing if they are in the offset pool.

Check your monthy mortgage statement to make sure that the offseting is being done correctly.

note +ve amounts in the mortgage current account also offset so that is a good place for overpayments rather than overpaying the main mortgage to build up an overdraft limit on the MCA you build up a positive surplus you can draw on.

Wilfieboy

Yes it looks like they are from todays latest letter. It's like they have totally changed the product we have bought. If I changed to a fixed rate product (which is probably what they want!) can they then change those rates to suit them if they decide it does not make them enough money?

I cannot understand how two weeks ago they can reply to my letter and say 'no don't worry nothings changed for your mortgage reserve account Mrs Concerned your rates will continue to mirror'
and now today say everything is now changing and you'll be paying 4.99% on your reserve.

getmore4less

I don't have my paperwork handy and not at home to see if I have a letter yet, but it should not work like that.

For offset mortgages.
I don't think there is mirroring of rates the funds are pooled, thats the way it is on my monthly statements, there is no mention of the reseve just the net ballance at the mortgage rate.

They should still pool all the accounts and apply the rate on the mortgage account to the net ballance it should not make any difference what the account rates are on any of the accounts that are pooled in credit or in debit.

It would get complicated if the rates are different because you would want the offset funds offsetting against the reserve first if it was a higher rate.

Non offset mortgages have always been SVR for the reserve.