Nationwide Mortgage - new fees and charges

Thrugelmir

ph294 wrote: »

I questioned the legitimacy of this (based on the T&Cs)

Full consent to let conditions are clearly published on the Nationwide website.

ph294

Thrugelmir wrote: »

Full consent to let conditions are clearly published on the Nationwide website.

Hi Thrugelmir,
Thanks for your interest but I'm not really sure what point you are making or why you are making it. As I said in my first post, I have read the all of this thread and the other one on the same topic and have therefore read the complete discussion on conditions etc. Naturally I have looked at the consent to let form and the wording that it contains but that doesn't change my view on the legitimacy as I haven't signed up for those conditions and they don't form any part of the contract that I have with NW.

That said, I welcome the chance to repeat that discussion that has been had with others in this thread as I expect to have multiple discussions with NW it would be useful to me to rehearse my points, apologies to others if I'm recovering old ground and for the length of this post but here goes:

4 years ago, when I signed up for my mortgage, I entered into a contract with Nationwide. The terms of this contract are documented in my mortgage offer plus the standard terms in the "Mortgage Conditions 2001" document that Nationwide published and sent to me.

There are 2 clauses of specific relevance to my case and to this thread, I've paraphrased in square brackets to shorten the irrelevant parts but left the key statements as they appear in the document.

- Clause 5.1 states: "We [Nationwide] may change the interest rate applicable to the debt at any time except during any fixed rate period under the mortgage offer.[...]"

- Clause 12.3 deals with letting the property and states "[the property should not be let] without first getting our written consent. Such consent may have conditions or be subject to a fee. We will only refuse to give our consent if it is reasonable for us to do so."

Before I state my opinions, I should give my credentials (or rather lack of them). I don't have legal training so in legal terms I'm a layman but in my work I do work with solicitors to draw up contracts for customers and suppliers so I have a reasonable understanding of how to interpret contract clauses (albeit in a very different profession that has nothing to do with financial services).

To me clause 5.1 very clearly means that NW do not have the right to impose a change in rate until the end of my fixed-rate period (another 6 years) unless we both agree a change to the conditions.

Making a request for consent to let using the standard form looks as though it would effectively be a mutual agreement to adjust the conditions to add a 1.5% to my rate. Clearly this isn't an agreement that I would like to make as it means an additional cost to me.

My interpretation of clause 12.3 is that if I were to make a request for consent to let by not using the standard form then NW could only refuse to give consent if it is reasonable to do so. I've already been told verbally that if I were to sign up to the 1.5% then it would be very likely that consent would be granted so it appears as though the only reason for refusal would be my unwillingness to agree to a rate increase. If that is the case then I think this is distilled down to a single question - should/would it be considered as "reasonable" to refuse consent to let because I am unwilling to sign up to a change in my conditions that imposes a rate increase? Given that this rate increase wasn't even conceived of when I entered into a contract with NW I can't see how this could be considered as reasonable. Had I been aware of this rate increase when I signed the contract, I wouldn't have signed - letting was always a potential future for me and I wouldn't have wanted to bind myself to what would now be very unfavourable rates for such a long period.

So, I was really interested to see what conclusions others in similar situations had now reached as the general impression from this thread was that NW would ultimately back down on this but my (now 2) conversations with customer services today has showed no signs of a policy change in relation to those on a fixed term.

Again, sorry for the long post, thanks for reading if you've got this far!

Pete

Vincenzo

ph294 wrote: »

There are 2 clauses of specific relevance to my case and to this thread, I've paraphrased in square brackets to shorten the irrelevant parts but left the key statements as they appear in the document.

- Clause 5.1 states: "We [Nationwide] may change the interest rate applicable to the debt at any time except during any fixed rate period under the mortgage offer.[...]"

- Clause 12.3 deals with letting the property and states "[the property should not be let] without first getting our written consent. Such consent may have conditions or be subject to a fee. We will only refuse to give our consent if it is reasonable for us to do so."

On 5.1, NW would say that they have not increased the interest rate....see below....

I have always held the opinion that clause 12.3 does not allow for NW to increase the interest rate payable for consent to let. They may call the 1.5% a "fee" but it has the same effect as an increase to the interest rate (because it is!). They must have taken legal advice on this but it is yet to be tested.....

I expect the reason you have been told the fees apply is because you are applying for consent after the new T&Cs were announced. Those that were already letting had no choice in the matter. I appreciate you were taking a long term view and I did the same when I took out my NW mortgage. I am yet to contest as the rate will not apply to my mortgage until the current consent period ends, by which point I was rather hoping they would have done do a graceful u-turn!

ph294

Vincenzo,

Both good points, thanks.

Vincenzo wrote: »

On 5.1, NW would say that they have not increased the interest rate....see below....

I have always held the opinion that clause 12.3 does not allow for NW to increase the interest rate payable for consent to let. They may call the 1.5% a "fee" but it has the same effect as an increase to the interest rate (because it is!). They must have taken legal advice on this but it is yet to be tested.....

I thought this would be the case but was surprised to see the letting page on the NW website (I'm not allowed to post links but it is at nationwide website /mortgages/usefulinformation/letting.htm) refers to:

"Additional letting interest rate

For new letting requests* an additional letting interest rate of 1.5% (variable) will be charged on all accounts (exclusions apply)"

Given this, I don't think that they could make any claim that this was anything other than an interest rate increase and contrary to 5.1. I'm also interested to know if there is a definition of the exclusions as maybe us fixed-raters are the exception.

Vincenzo wrote: »

I expect the reason you have been told the fees apply is because you are applying for consent after the new T&Cs were announced. Those that were already letting had no choice in the matter. I appreciate you were taking a long term view and I did the same when I took out my NW mortgage. I am yet to contest as the rate will not apply to my mortgage until the current consent period ends, by which point I was rather hoping they would have done do a graceful u-turn!

I did feel that I had come into this process quite late on and that I might have missed the boat but I hadn't time or incentive to look into this until now. My view is that I am bound by the fixed-rate term and that whether or not I had started to rent out my property, I should expect NW to honour the terms of the contract. I have more sympathy for those who are already relying on renting and are now stuck with the extra cost than I do for my own case. But I am still stuck with either not being able to rent; paying a huge fee to change my mortgage now; or paying an extra significant sum per-month for the privilege of borrowing the exact same amount on the exact same property. I think I read somewhere that the rate increase was because of an increased risk of defaulting but given that my total debt on 2 properties even without rental income would be less than 2-thirds of what NW themselves said today that they would be willing to lend to me without any rental income, there are no grounds for believing that I am now any greater risk.

So I'll continue with this - the next step is to talk to an advisor in branch (hopefully very soon) and then possibly I will submit an application for consent to let without using the standard form (providing all the information included on the standard form but not agreeing the 1.5% increase). That way they would have to either grant or reject consent and if they reject I can challenge that.

Pete

Vincenzo

Ph294 - are you buying or do you own a property you will be living in? If so have you considered porting your Nationwide mortgage to that property and taking out a BTL on the one you will be letting?

ph294

Vincenzo wrote: »

Ph294 - are you buying or do you own a property you will be living in? If so have you considered porting your Nationwide mortgage to that property and taking out a BTL on the one you will be letting?

Yes, the idea is to buy another property and move into that. I haven't done all of the shopping around and the sums in detail yet but if it were a choice between paying the extra 1.5% and porting then it would be down to what the % difference between the best residential and BTL mortgages would be - wouldn't surprise me if that were about 1.5%!

If there is no move on the 1.5% then there could be other permutations too (even taking the early repayment hit might work out better in the long run) but what it pretty certain is that the best deal for me would be existing fixed rate with consent to let plus new residential rate for the new property.

What I want to avoid is a lengthy process to resolve the 1.5% issue as I don't want to delay the purchase. I'll probably have to decide to jump one way which would be to take a new residential mortgage for the new property and sort out renting later - this would eliminate the porting option and just leave me with a choice of 1.5% increase or early repayment charge and slightly better BTL rate elsewhere - given that I've still got 6 years on the fixed rate, the early repayment hit might still be the better option (plus it allows me to vote with my feet).

Pete

Vincenzo

In that case you may as well argue the toss with NW and see what happens. Good luck with it. I would be interested to hear your progress if you are happy to keep us updated?

Smoked_Haddock

Could the board be looking to build the balance sheet? Will there be share options when they demutualise?

Haddox

Equaliser123

Has anyone got a complaint still in with the FOS?

Engeroosi

PH294 the fact is if you had permission to let the property out before the fees came into place then you are exempt from any of the fees. If you are seeking to have permission to let since the fees are introduced then you have to stump up the fees!