Nationwide increase monthly payments on fixed rate deal

Thrugelmir

Gorgeous_George wrote: »

Interesting thread.

I have some sympathy with both sides of the argument but, on balance, I think I'd settle on th OP's side.

I understand that BTL can be a greater risk and that this should be reflected in the premium charged. Perhaps an offer of insurance against this risk could be offered rather than a blanket 1.5% fee. BTL risks are partially offset by increased opportunities for example, if I lose my job I may struggle to pay my residential mortgage. However, if my tenant loses her job and falls behind with the rent, I could have her evicted and find myself a new tenant. She may avoid eviction if she qualified for LHA.

Nationwide, like many other financial institutions, have failed to anticipate the risks to their business. Had they foreseen the risks of unprecedented applications for CTl on their residential mortgages, they may have made the charge from the outset.

I think we may hear more from Nationwide before this year is out. I think they may well be in huge financial trouble and the ConDems might condemn them to the scrapheap.

GG

CTL is totally at the discretion of the lender. There is no automatic right for the borrower to even be granted it. As threads like this demonstrate the facility more recently has been abused. As people have taken advantage of the loop hole. Particularly as the previous Government asked lenders to act with restraint.

As is often the case. The wheel has turned full circle. Leaving the N\W no option but to harden its line. As you are aware GG there is a fundamental difference between BTL and residential mortgages. The reason BTL is unregulated is that its a commercial loan and borrowers are considered knowledgable enough to be aware of the risk they are undertaking.

Vincenzo

Thrugelmir wrote: »

CTL is totally at the discretion of the lender.

As explained on another thread, this is not true. The T&Cs of Nationwide (2001) clearly state that consent to let will not be unreasonably withheld. This effectively means that the lender does NOT have absolute discretion and must show that they have been reasonable in withholding consent. There are very few circumstances in which they can do so.

This topic continually goes off on a tangent. The issue here is that for borrowers tied into a fixed rate period, Nationwide have introduced a retrospective and punitive charge. Very few people would argue that the theory behnd the charge is inherently unfair. What is unfair is the way it is being introduced.

stamper

brit1234 wrote: »

Its a residential mortgage, you have been given a generous 3 year period to consent to let. Buy to let is a far higher risk due to higher percentages of repossesions. So you either live in your property with a residential mortgage or you pay a higher rate for the higher risks with buy to let.

Where is the issue?

You can't have you cake and eat it.

I'll say again. There was no talk of a 3 year limit when Nationwide granted a residential 10 year fix. If they had stated that the consent would last for 3 years then the rate would go up to whatever they wanted it to be, then of course I would have made a different decision. The fact is this: Nationwide consented to a 10 year fix on a let property with no additional conditions. Now they are fundamentally changing their side of the contract and expecting mine to remain the same.

Your argument seems to entirely miss the point that the contract is being fundamentally changed by Nwide to the detriment of its customers, when the customer had no way of predicting that this would be the case, and no option to dissolve the current contract.

Ascribing human characteristics like generosity to corporations, and talking about additional risks that Nationwide were perfectly aware of at the time the offer was made, is irrelevant. You also seem to suggest that while the consumer cannot 'have his cake and eat it', Nationwide can lock that consumer into a deal, then change the rate to anything at any time. What would you call this?

This is not a debate about the risks of BTL vs residential mortgages. This is a debate about contract terms. Everything else is padding.

Vincenzo

stamper wrote: »

I'll say again. There was no talk of a 3 year limit when Nationwide granted a residential 10 year fix. If they had stated that the consent would last for 3 years then the rate would go up to whatever they wanted it to be, then of course I would have made a different decision. The fact is this: Nationwide consented to a 10 year fix on a let property with no additional conditions. Now they are fundamentally changing their side of the contract and expecting mine to remain the same.

Stamper - I had not realised you had a 10 year fix. That is harsh! If you have no joy with Nationwide and you have a main residence with a mortgage (without such a long tie in), perhaps you could port the Nationwide mortgage to your other property or redeem it and take out another with them on your main residence (I believe they will refund the redemption penalty in this instance).

Then get a BTL on the let property, assuming of course you can get a better rate than the Nationwide fix +1.5%. Many BTL mortgages currently have an initial fee of 3% so it would be worth waiting 2 years until which time there should be more options on the market.

Thrugelmir

Vincenzo wrote: »

As explained on another thread, this is not true. The T&Cs of Nationwide (2001) clearly state that consent to let will not be unreasonably withheld. This effectively means that the lender does NOT have absolute discretion and must show that they have been reasonable in withholding consent. There are very few circumstances in which they can do so.

You are the customer , the N/W is the lender. So the N\W has total discretion in terms of the criteria it uses in making its decision. As a customer you have no option but to accept their decision.

As a customer you have the option of transferring your business elsewhere. Thats the ultimate sanction to use.

The N\W is a mutual society and has a duty of care to treat its membership in a fair and equitable way. It has a commercial lending arm for those require that type of funding.

Vincenzo

Thrugelmir wrote: »

You are the customer , the N/W is the lender. So the N\W has total discretion in terms of the criteria it uses in making its decision. As a customer you have no option but to accept their decision.

As a customer you have the option of transferring your business elsewhere. Thats the ultimate sanction to use.

The N\W is a mutual society and has a duty of care to treat its membership in a fair and equitable way. It has a commercial lending arm for those require that type of funding.

Except that they DO NOT have "total discretion in terms of the criteria it uses in making its decision"! They have to work within the terms and conditions of the mortgage contract. In this case, in practice they cannot withhold consent.

The argument here is that they are effectively changing the interest rate on a fixed rate mortgage, again not permitted in the T&Cs, and disguising it as a fee to bring it within the T&Cs. I would question the legality of this.

The point about moving elsehwere is the issue! This is being applied to mortgages that are within a fixed term period and therefore subject to redemption penalities.

You seem to be missing the point that this is a retrospective and punitive charge. It is irrelevant that it is related to CTL.

Besides if it was really about the extra risks of letting Nationwide would offer these customers the option of moving the mortgage to a relevant product (with their BTL arm, The Mortgage Works) without penalty.

As I keep saying I am not against the fees and charges. I just think Nationwide should apply them in a "fair and equitable way".

poppy10_2

Vincenzo wrote: »

As explained on another thread, this is not true. The T&Cs of Nationwide (2001) clearly state that consent to let will not be unreasonably withheld. This effectively means that the lender does NOT have absolute discretion and must show that they have been reasonable in withholding consent.

It could easily be argued that it is not unreasonable to withhold consent to let after they have given you a whole three years to find a more appropriate buy to let mortgage for your buy to let property, rather than remaining on a residential rate.

Vincenzo

poppy10 wrote: »

It could easily be argued that it is not unreasonable to withhold consent to let after they have given you a whole three years to find a more appropriate buy to let mortgage for your buy to let property, rather than remaining on a residential rate.

The term 'reasonable' is a legal one. I come across it in commercial leases regularly. They cannot witthold consent because they decide they no longer wish to give it.

getmore4less

The problem is you have 2 seperate contracts.

One is to borrow money
The other is consent to let.

It is your fault if you failed to syncronize them.

If you change your mortgage contract part way threough a consent to let you had the choice, go full buy to let or take out another residential mortgage with the remaining consent to let.

The consent to let renewable every 3 years is seperate from the mortgage T&C's.

The only clause you are relying on is the unreasonable one.

Charging a fee for consent to let on residential mortgages is I think reasonable since it is fairly common.

So is the size of the fee they are going to charge unreasonable?

I think that is your only chance and 1.5% is not that high.

getmore4less

Vincenzo wrote: »

The term 'reasonable' is a legal one. I come across it in commercial leases regularly. They cannot witthold consent because they decide they no longer wish to give it.

They are not withholding they are just adding some charges in line with other lenders in the industry.