Nationwide increase monthly payments on fixed rate deal

Hopejack

ET1976, at last someone who speaks some sense! To cap what you've said, basically a btl is more likely to be repossessed than an owner/occupier property - there is the risk. You only have to look around some of the more favourable btl areas i.e. 'apartment' blocks bought in the btl heyday, and see how many are up for sale (and still are with prices dropping) to illustrate the risk.

I agree it's not fair to drop this charge on you, however, the lender (within reason) can do what they want, it's their money you are using to fund your btl to a greater or lesser extent. Tough times call for tough measures on their behalf.

The best thing one of you can do is get someone legal to have a look at your contract wording if you can't make it out yourselves and see if there is a loophole there to make this charge unlawful and share the findings on here.

stamper

We seem to be clouding the issue, and it's an incredibly important one for all of us. Whether it is a BTL mortgage is irrelevant. Whether it's right that a BTL investor gets a residential mortgage is irrelevant. Whether BTL investors make money from this is irrelevant. The only relevant part is whether it is right that Nwide can introduce a large (1.5% on a 5% fix would be 30%) increase on the rate payable on a fixed rate mortgage to which both sides have agreed. Personally I suspect that this would fall foul of the Unfair Terms legislation. The FSA produced a useful document on this point you can find by searching for 'FSA statement of good practice' which seems to suggest that the term would be considered unfair. It is debatable as to whether the FSA actually covers this product as it is a residential/btl grey area, but it seems that the principal has at least been considered and found to be shaky.

Remember that Nwide state that this is due to the risk of default, so if you're feeling like BTL landlords are getting what they deserve here, it's a short step from here to Nwide doing exactly the same thing for your own mortgage if your LTV goes over a certain limit. We absolutely need to establish the principal and precedent in this case.

ET1976

The point (as suggested by the poster who used to work for Nationwide), is that they are not changing the terms of the fixed rate mortgage.

You take out a residential mortgage with them at a fixed rate, this is untouchable.

In addition, you come to a separate agreement with them that you are allowed to rent the property on this residential mortgage, an agreement which has its own T&Cs separate from those of the mortgage itself.

What they are changing is the terms of the separate agreement. If there is not a clause in the T&Cs for that agreement to the effect that additional charges may apply at any time, then they wouldn't be able to do this. I haven't checked mine yet but I will eat my hat if there isn't such a clause.

Steaminboot

I am raging but relieved :mad::o

I also received this extremely poorly drafted letter today and due to it's vagueness thought i was now going to have to pay an extra £70 a month on the remaining 2 yrs of my mortgage.

As i dont rent out my home, it wasn't until i phoned them that they clarified that the fee's would only apply if i made changes to my morgage. I was put through to the team that is dealing with the changes and made complaints about the letter and the leaflet, though i can guess what effect that might have ..........

I have , at least , the relief of knowing it doesnt apply to me though so my thoughts go to those of you who are having to deal with this additional financial burden.

pararct

If there are two separate agreements then it's quite simple.

3 years ago NW gave permission to let on a residential mortgage, one of the conditions of that permission was the situation would be reviewed after 3 years.

3 Years on the mortgaged asset is still in let therefore they reserve the right to levy a charge.

If the intention was to let before the mortgage had been acquired then a residential mortgage would never have been granted.

Whilst scouring the contract document examine closely the definition of the mortgage you have and the conditions you have to observe to meet the terms of that mortgage.

One distinct difference between the two is Bona fida BTL mortgages can have margin calls placed upon them residential do not.

Sounds like you will have to like it or lump it. That or end the letting arrangement move back in yourselves and the problem is solved.

Point to note for the future if you intend to 'soldier on'. The NW may take the view your mortgage should be transferred to a bona fida BTL product if they think the letting arrangement will be long term. There will almost certainly be a clause in the contract that will allow them to do this.

jubjub

When I got written authority in 2004 ( I was supposed to reapply in 2007 but took out my 5 year fixed rate in Feb 2007 and it was asked if I was still letting the property which thry said was fine ) there were no terms and conditions attached other than the tenant was not allowed to sub-let and it was not to be let to anyone with diplomatic status.

Harry_J

ILW wrote: »

It appears the fixed rate was on a residential mortgage. The terms are different now you have in fact converted to a BTL product.

Although it is not exactly the key point, We didnt change the terms of our mortgage. We already had permission to rent out BEFORE converting to a fixed rate.

The key purpose of taking a fixed rate is so that we could secure the monthly payments at a rate we could afford. There was no mention that monthly payments could be varied. Given the security is why most people fix, any company which treats customers fairly would surely mention their right to add 1.5% interest rate.

Harry_J

jubjub wrote: »

When I got written authority in 2004 ( I was supposed to reapply in 2007 but took out my 5 year fixed rate in Feb 2007 and it was asked if I was still letting the property which thry said was fine ) there were no terms and conditions attached other than the tenant was not allowed to sub-let and it was not to be let to anyone with diplomatic status.

Exactly the same as us. No "temporary contract", no "3 year limit", no mention that payments could be vaired.

We've complained to Nationwide. When they deal with it by saying its their right to change (I've actually complained that they didnt mention that they could vary the monthly payments and should have done given the prime purpose of a fixed rate is to firm up on the monthlies), I'll raise it with the Ombudsman. Might not get us anywhere but if you dont try.....

Harry_J

pararct wrote: »

If there are two separate agreements then it's quite simple.

3 years ago NW gave permission to let on a residential mortgage, one of the conditions of that permission was the situation would be reviewed after 3 years.

3 Years on the mortgaged asset is still in let therefore they reserve the right to levy a charge.

If the intention was to let before the mortgage had been acquired then a residential mortgage would never have been granted.

Whilst scouring the contract document examine closely the definition of the mortgage you have and the conditions you have to observe to meet the terms of that mortgage.

One distinct difference between the two is Bona fida BTL mortgages can have margin calls placed upon them residential do not.

Sounds like you will have to like it or lump it. That or end the letting arrangement move back in yourselves and the problem is solved.

Point to note for the future if you intend to 'soldier on'. The NW may take the view your mortgage should be transferred to a bona fida BTL product if they think the letting arrangement will be long term. There will almost certainly be a clause in the contract that will allow them to do this.

When we got permission to let-out we actually tried to convert to BTL but they advised that we could stick as we were. There was no 3 year limit - or any limit, no contract change, just a letter of confirmation saying that we had permission. When we converted to fixed, the rental arrangement still continued.

Ironically, we fixed before all the rates dropped - thats the risk and we accepted it. Before the 1,5% increase, the existing rate is still greater than other open market BTL mortgages on fixed rate deals. The extra 1.5% takes it way above. We have to lump it - we are on a fixed rate deal with a hefty ERC so that's why we feel this is completely unfair and they are not treating customers fairly. I'd have some sympathy if they did this at the end of the deal or reduced the ERC as they have put us in a difficult position.

They say the risks are greated.....here's 2
1) We are less likely to be able to afford the increase, so therefore may default.
2) N/w suggested option of passing on the increase to the tenants, could result in them moving out, resulting in with a much bigger problem.

They are increasing the risks with this!!!

Of course we could move in and pay the mortgage on two properties with no rental income. NOT.

Harry_J

ET1976 wrote: »

The point (as suggested by the poster who used to work for Nationwide), is that they are not changing the terms of the fixed rate mortgage.

You take out a residential mortgage with them at a fixed rate, this is untouchable.

In addition, you come to a separate agreement with them that you are allowed to rent the property on this residential mortgage, an agreement which has its own T&Cs separate from those of the mortgage itself.

What they are changing is the terms of the separate agreement. If there is not a clause in the T&Cs for that agreement to the effect that additional charges may apply at any time, then they wouldn't be able to do this. I haven't checked mine yet but I will eat my hat if there isn't such a clause.

If there are separate T&Cs, we have never seen them. We got a very nice letter of permission and nothing else. There is no mention in the letter of changes to a separate agreement. The opposite in fact. It says they introducing a new charge into the existing account.