Nationwide increase monthly payments on fixed rate deal

Harry_J

We are 2 years into a 5 year fixed rate deal with Nationwide.

Nationwide have written today to say they are increasing the monthly payments by 1.5% as we will have rented the property out for 3 years.

How on earth is it justifiable to vary the monthly payments on a fixed rate deal?

Keith

Because you've rented out the house?

_Andy_

Because consent to let has finished and it's no longer a residential mortgage like when you originally took the mortgage out.
Not sure why you're asking given you answered it in the same post.

Harry_J

Keith - Yes. We got permission to rent out the house from them prior to converting from a variable to a 5 year fixed deal. It was on the record with the 5 year fixed deal.

They have now introduced a 1.5% monthly fee to all customers who have rented property out for 3 years or more. The rate hasn't changed but they have introduced a new monthly fee.

The purpose of uis (and anyone else I guess) of taking out a fixed rate product was to ensure the monthly payments were known, affordable and consistent. They have sneakily introduced this.

I phone their help line and they said "Well you could stop renting it out to avoid the 1.5%". I did ask how this would help pay the rest of the mortgage????

Harry_J

Andy, - consent hasnt finished. They haven't mentioned that. The opposite in fact - their letter confirmed that consent is already in place.

The reason they quote is to pay for extra admin costs. I asked them for a breakdown and why the costs are different now - they couldn't say. We get the same letters over the last 3 years as we had before.

The point is that this is fixed rate deal. If they are allowed to increase monthly payments (to cover costs) then surely this could be done on any fixed rate deal. They havent changed the interest rate but introduced a brand new fee to cover admin costs.

dimbo61

Nationwide have a whole host of new charges and you have rented out the property for over 3 years now.
You did not take out a BTL mortgage before you rented out the property because ? It would have cost more YES
Now if you dont like what Nationwide have done complain to them and then the FSA or vote with your feet and move lenders/ sell up

Harry_J

dimbo61 wrote: »

Nationwide have a whole host of new charges and you have rented out the property for over 3 years now.
You did not take out a BTL mortgage before you rented out the property because ? It would have cost more YES
Now if you dont like what Nationwide have done complain to them and then the FSA or vote with your feet and move lenders/ sell up

Thanks for the great advice Dimbo....how did you get all those thanks?
Already doing all those things and looking for alternative deals. The fixed rate wasn't very good and with the extra 1.5% there are better BTL deals on offer even after the costs of moving.

However, forget the rental aspects here. Clearly, they have now decided that they can increase the monthly payments on ANY fixed rate mortgage because their administration costs have gone up mid-term. When we took the fixed deal out, there were risks on both sides. Both parties should have to live with that for the full 5 years. It seems they can change their mind and increase the mionthly payments. This is a brand new charge on this mortgage not one that existed at that start of the deal.

If its ok on this one, expect it on any fixed rate deal any time soon from any provider.

Funnily enough, when we took the fixed rate out (to fix our monthly payments at a rate we were certain we could afford), there was no explanation that N/w had the right to increase our premiums. That's the key point I'll be raising with the FSA.

cj25_2

Do you have the mortage contract and information that you signed up for? It may be worth looking through the clauses to see if there is anything about varying fees or admin charges in order to work out whether they should be able to.

Arguably if there isn't, and you've signed a deal saying that you'll borrow £x at y% with monthly payments of £z and charges of £a, £b and £c in cases a b and c then that's what you're obliged to do?

It doesn't seem sensible that halfway through the contract they can decide they should have asked for more .. unless of course they left a clause letting them do this in the first place!

property.advert

If this term is not in the original agreement or in the variation of that agreement made when consent was given then I do not see how it can be introduced. They cannot arbitrarily introduce extra charges. What if they wanted to add 25% for instance ? the argument is the same.

Either it is in the T&C or it is not.

Pincher

There is a premium on Buy To let mortgages.
If consent to let was free then every landlord will want to get a residential mortgage instead.

Harry_J

cj25 wrote: »

Do you have the mortage contract and information that you signed up for? It may be worth looking through the clauses to see if there is anything about varying fees or admin charges in order to work out whether they should be able to.

Arguably if there isn't, and you've signed a deal saying that you'll borrow £x at y% with monthly payments of £z and charges of £a, £b and £c in cases a b and c then that's what you're obliged to do?

It doesn't seem sensible that halfway through the contract they can decide they should have asked for more .. unless of course they left a clause letting them do this in the first place!

Thanks CJ25. Will take a look