Nationwide increase monthly payments on fixed rate deal

jubjub

Anybody?????

bypasser

Have just received a response from Nationwide with regard to the 1.5% increase. In that letter they that their decision was 'to apply an additional interest rate on properties which have been let and those that will be let in the future'. So according to them, it is the interest rate which will be increased by1.5%. Thought this might be of help to those on fixed rate mortgages.

jubjub

My 5 year fix rate started in February 2007, therefore I should require a new consent to let (if as stated these only last for 3 years) If so, and I ask for it now (or at latest before September) will I escape the extra charge until that runs out in 2013?

jubjub

I spoke to some right arrogant piece of !!!!!! today, who rejoiced in the fact that I would have to pay an extra £88 a month or £2069 early redemption fee, and then smuggly stated that they offer the cheapest BTL mortgages, and that it's pointless complaining to the Ombudsman as the FSA say that their T&Cs are correct.

cheekymuppet

I too am in the same situation, and have just spoken to Nationwide. Apparently even with a CTL I will still have to pay the extra 1.5%. What gets me is I'm on a fixed rate, and the letter clearly says, "Additional letting Interest Rate"... I wouldn't mind if I could change mortgage and not have to pay the Early Redemption Penalty, but it seems I'm stuck between a rock and a hard place!

smapjb - what was the actual response you got, could you copy and paste the email?

Murphys

We are renting our house because we are overseas. We are not working for large petroleum companies or earning vast amounts of money. We did not buy to let. We took out a 10 year fixed rate - our property was already let - in our second year out here, so that we did not need to worry too much about finances and changing interest rates. What now?
I think the key is
On what basis was the 1.5% determined - on what basis was the additional risk and admin costs assessment made? How can N justify such a large increase?
Armed Forces are not charged this 1.5%, why should we?
Implementing this change surely increases the risk - when rented, the rent does not cover fully our mortgage costs, what now?
We have another 6 years with N and our fixed rate - is their increase of 1.5% represent a breach of contract? Is it legal, at UK or European level?
Is there some legal person out there with the knowledge and experience, who would be prepared to take on N if dozens and maybe more people wish to start a legal case against N?

madeupname1

Murphys wrote: »

We took out a 10 year fixed rate - our property was already let - in our second year out here, so that we did not need to worry too much about finances and changing interest rates. What now?
I think the key is
On what basis was the 1.5% determined - on what basis was the additional risk and admin costs assessment made? How can N justify such a large increase?
Armed Forces are not charged this 1.5%, why should we?
Implementing this change surely increases the risk - when rented, the rent does not cover fully our mortgage costs, what now?
We have another 6 years with N and our fixed rate - is their increase of 1.5% represent a breach of contract? Is it legal, at UK or European level?
Is there some legal person out there with the knowledge and experience, who would be prepared to take on N if dozens and maybe more people wish to start a legal case against N?

There seems to be a few fundamental misunderstandings in this thread (which may have been addressed earlier, but I haven't read through it all).

If you take out a residential mortgage it is a condition of the mortgage that you occupy the property. Stated another way, you have contractually agreed that you will live in the property and that you will not give up possession of it by letting it out.

If you apply for a consent to let the property out, you are essentially asking the mortgage provider to vary the terms of the contract that you agreed to, the variation being that you should be allowed to let the property. At that point, the mortgage provider has a number of choices. First, it can just agree to allow the variation in the contract. Some do, but they are not obliged to. Second it can refuse to allow the variation. Third it can agree the variation subject to conditions (e.g. a condition that you pay extra interest). The reason they are able to get away with asking you to pay extra interest (even though it was not contractually agreed) is because you are asking them if you can let out the property (something that was also not contractually agreed). Its a quid pro quo.

There may be some cause for official complaint if the amount of interest being charged was wholly exploitative, but 1.5% extra does not sound as though you are in that territory.

Vincenzo

madeupname1 wrote: »

There seems to be a few fundamental misunderstandings in this thread (which may have been addressed earlier, but I haven't read through it all).

If you take out a residential mortgage it is a condition of the mortgage that you occupy the property. Stated another way, you have contractually agreed that you will live in the property and that you will not give up possession of it by letting it out.

If you apply for a consent to let the property out, you are essentially asking the mortgage provider to vary the terms of the contract that you agreed to, the variation being that you should be allowed to let the property. At that point, the mortgage provider has a number of choices. First, it can just agree to allow the variation in the contract. Some do, but they are not obliged to. Second it can refuse to allow the variation. Third it can agree the variation subject to conditions (e.g. a condition that you pay extra interest). The reason they are able to get away with asking you to pay extra interest (even though it was not contractually agreed) is because you are asking them if you can let out the property (something that was also not contractually agreed). Its a quid pro quo.

There may be some cause for official complaint if the amount of interest being charged was wholly exploitative, but 1.5% extra does not sound as though you are in that territory.

The Mortgage Conditions allowed for consent to let so there is no variation to the terms. Even Nationwide state they are only amending the fees and charges NOT the contract.

For those interested we have been through this in more detail on another thread...

https://forums.moneysavingexpert.com/discussion/2486131

madeupname1

Vincenzo - I don't have the Nationwide MC so I cannot comment upon what they specifically say. You note (and from a brief read of the thread you linked) that there is a provision for consent to let. But presumably that provision gives Nationwide a discretion as to whether they will consent to let and, if they do, upon what terms they will consent. I see that there might be some issue if they grant a 3 year consent to let and then in year 2 add on an additional fee that was not previously agreed. But aside from that, I don't see the problem. And I speak as someone who has received a similar letter from Capital Home Loans.

Vincenzo

madeupname1 wrote: »

Vincenzo - I don't have the Nationwide MC so I cannot comment upon what they specifically say. You note (and from a brief read of the thread you linked) that there is a provision for consent to let. But presumably that provision gives Nationwide a discretion as to whether they will consent to let and, if they do, upon what terms they will consent. I see that there might be some issue if they grant a 3 year consent to let and then in year 2 add on an additional fee that was not previously agreed. But aside from that, I don't see the problem. And I speak as someone who has received a similar letter from Capital Home Loans.

The terms state that Nationwide cannot unreasonably withhold consent so they do not have complete discretion over whether or not they grant it. With respect to the fees and charges, these are separate to the mortgage conditions and can be varied, as they are doing now.

I am not arguing blankly against the charges. TBH Nationwide are years behind most other lenders on this. What I think is unfair is that borrowers on fixed terms, fixed rates and/or within a period of consent will be hit with this big increase in costs which could not have been foreseen, no matter how diligent they were.