Nationwide Mortgage - new fees and charges

Solent_2

I think Nationwide's course of action is more than just unfair / immoral / underhand etc. I think it is actually in breach of contract.

Obviously this is an increase in the interest rate - but they can't admit that because either you're still on a fixed rate, or else you're on the SVR which is guaranteed not to go more than 2% above base rate. Either way they can't make it any higher. The way around it? Pretend this isn't an interest rate increase - it's a "fee or charge", which they can vary at will.

The problem is that it is *not* a fee or charge - the T&Cs have a definition of fees and charges, and this isn't one. Furthermore, fees and charges can only be charged at a level which is fair in relation to the amount of additional work they are having to do for you. If, as in my case, they have done *no* extra work at all as a result of my property being let, they can't charge anything.

I'm writing them a detailed letter explaining my objections and accusing them of breaching contract. I've copied it below - please feel free to make use of it (with amendments for your own circumstances) if you like.


Dear Mr Beresford,

Mortgage Account No. xxx

Thank you for your letter dated May 2010 informing me that you intend to apply an additional letting interest rate of 1.5% to my mortgage account from 1 December 2010.

I am writing to inform you that I do not agree to this additional interest rate being applied to my mortgage. You will be acting in breach of the terms and conditions of the mortgage if you do so. I explain in detail below why I believe this proposed change in interest rates would be in breach of my agreement with you. I would be grateful if you would refer this letter to your legal department for their response. I look forward to hearing from you in due course that you will not be imposing this unjustifiable increase.

Although this is clearly a proposed increase in interest rates, you describe it as a new “fee or charge” on the Tariff of Charges. It is not difficult to understand why you insist on this unnatural description: you cannot increase the interest rate on my mortgage, because it is guaranteed to never exceed 2% above base rate. The current rate of 2.5% is therefore as high as you can make it.

What you are proposing to do cannot, however, be described as a “fee or charge”. In you leaflet “Changes to Mortgage Fees and Charges: Questions and Answers” you suggest that the additional letting interest rate is designed to better reflect the “additional risk” that Nationwide carries because my property is rented out. With respect, this is irrelevant to the question of fees and charges, which are only allowable to cover specific additional services and costs which Nationwide might incur in certain circumstances. Section 3.8 of the Mortgage Conditions 2001 defines fees and costs as follows:

3.8 In addition to interest, we may charge you:
i) for additional services we provide; and
ii) for additional costs or losses we incur; ...

We set out our tariff so that each fee or charge in it is fair and reasonable in relation to the cost to us of doing the type of work for which the fee or charge is imposed.

I would therefore ask you to answer specifically the following questions:

1. What additional services have you provided because my property has been let out which you would not have provided if I had been resident there?

2. What additional costs or losses have you incurred because my property has been let out which you would not have incurred if I had been resident there?

3. How have you calculated that the fair and reasonable cost to you of doing the type of work for which this fee is imposed amounts to an additional 1.5% on the mortgage interest rate?

It is my belief that you have not provided any additional services or incurred any costs or losses as a result of my property being let out. This “fee or charge” (as you describe it) is therefore not allowable under the terms of our agreement. If you impose it you will be in breach of contract.

I look forward to hearing your response, and your assurance that you will not be imposing this increase, as soon as possible.

Yours sincerely,

ET1976

Vincenzo wrote: »

Granted, the terms of consent can be changed BUT the t&cs state the interest rate will not be changed in a fixed rate period. I cannot see how this can be interpretted any other way.

THEY ARE NOT CHANGING THE INTEREST RATE OF THE MORTGAGE! They are changing the terms of the CTL! You can move back into the property and benefit from exactly the same mortgage rate as you signed up to originally - this wouldn't be possible if they were changing the interest rate of the mortgage.

Vincenzo wrote: »

You used the term 'getting one over', I tend to make informed financial decisions that I believe are beneficial to me! Is that not the MSE way?!

I amended that as I thought it was unfair - but what you (not you personally) believe is irrelevant, it's what's allowed under the T&Cs that counts (unless, as I said before, there is a case of misselling/misrepresentation going on).

ET1976

Solent wrote: »

I think Nationwide's course of action is more than just unfair / immoral / underhand etc. I think it is actually in breach of contract.

Well good luck to you if you manage to find a loophole and they withdraw the fees.

Then they can compensate for that loss of income by putting up their normal residential mortgage rates for people who are just trying to buy their one and only home to live in (who you are probably sympathizing with elsewhere on MSE), in order to subsidise those of us letting properties out indefinitely at an unbelievably low interest rate.

Vincenzo

ET1976 wrote: »

THEY ARE NOT CHANGING THE INTEREST RATE OF THE MORTGAGE! They are changing the terms of the CTL! You can move back into the property and benefit from exactly the same mortgage rate as you signed up to originally - this wouldn't be possible if they were changing the interest rate of the mortgage.



I amended that as I thought it was unfair - but what you (not you personally) believe is irrelevant, it's what's allowed under the T&Cs that counts (unless, as I said before, there is a case of misselling/misrepresentation going on).

OK, firstly they ARE changing the interest rate. It is increasing by 1.5%. Whatever Nationwide want to call it, that is what it is. Solent has covered this off very well in his letter to Nationwide. I cannot imagine why anyone would side with a financial institution on a technicality. I expect that Nationwide would lose this argument in a court of law.

Belief? Solent has covered off the interpretation of the t&cs (which is what this is all about) very well so I won't add any further to that.

ET1976

Vincenzo wrote: »

Whatever Nationwide want to call it...

That's entirely the point - they can call it what they want because they make the T&Cs. It may in practise result in a change in the interest rate for the customer but if they want to label it a fee then they can do so.

Anyone who can't see that what Nationwide are doing is entirely reasonable is just greedy and selfish.

As I say, good luck to you in finding a loophole. I'm out.

Vincenzo

ET1976 wrote: »

That's entirely the point - they can call it what they want because they make the T&Cs. It may in practise result in a change in the interest rate for the customer but if they want to label it a fee then they can do so.

Anyone who can't see that what Nationwide are doing is entirely reasonable is just greedy and selfish.

As I say, good luck to you in finding a loophole. I'm out.

I am not looking for a loophole, clearly Nationwide think they have found one!

I have another 2.5 years before the change will affect me and my fixed rate ends soon.

On a general note, I have no issues with them introducing this kind of fee structure. Other mortgage companies have been doing this for years and it makes perfect sense. I just think it is unfair to those who are stuck with them on a fixed rate with redemption penalities, who may be struggling to make ends meet. As I have said before many of these people will be accidental landlords at the mercy of the post 2007 property market - "greedy and selfish"??!

These financial institutions need to be kept in check, something we have failed, as a nation, to do for too long.

albo2002

I will also be writing to Nationwide to complain. It's particularly confusing as I originally took the mortgage out with the Portman Group, and they were bought out by Nationwide, and I believe their terms and conditions didn't allow this.

I can confirm that the 1.5% rise does include people on the SVR.

Anyone know what is stopping you moving back to the property for, say a week, and then moving back out again? And then telling Nationwide that you've moved back to the property, and then a week later announcing that you've moved back out again? Would the three-year rule then kick in from that moving-out date?

jacewuk

ET1976 wrote: »

That's entirely the point - they can call it what they want because they make the T&Cs. It may in practise result in a change in the interest rate for the customer but if they want to label it a fee then they can do so.

Anyone who can't see that what Nationwide are doing is entirely reasonable is just greedy and selfish.

As I say, good luck to you in finding a loophole. I'm out.

How can it be reasonable, I shook hands on a fixed rate deal with Nationwide two years ago. Now half way into the agreement, they have decided they want more money!!

I now have no choice but to pay it or pay the redemption fee if i want out. It's Nationwide who are greedy!

I have no complaint with Nationwide wanting to charge more money, but it should be done for new deals going forward and not implemented retrospectively. Otherwise any mortgage rate/deal you've signed up to is not worth the paper it's written on.

PiggyBank01

I`m one of these accidental landlords - it's my only property and I`m not some sort of BTL investor.

I`ve got myself a copy of the Nationwide T&Cs and it says:

6.1 Except for any period of fixed interest rates and subject to any interest rate cap provided for the mortgage offer, we may change the mortgage interest rate at any time

Also nowhere in the T&Cs or the Consent To Let paperwork does it say anything regarding a 3 year consent period.

So therefore I was fully informed when I fixed my mortgage 2 years ago on a 5 year deal. The only thing I need to worry about was to find/keep the property let. Surely that's the whole reason of getting a FIXED mortgage in that your monthly payments are FIXED.

If there WAS a limit to the consent period then obviously I would not have gone for a fixed deal for this exact reason. Therefore there are probably grounds that this was missold to me by the Nationwide as I fixed it whilst letting the property out (with consent).

Adding a £90 redemption fee to the Tariff Of Charges is one thing but wacking a monthly penalty on to the mortgage rate surely is unethical.

Also as someone who has already mentioned, what extra work (and therefore cost) am I pushing on them when I decide to let for them to justify a Consent To Let charge?

Here's the relevant section from the T&Cs:

4.8 In addition to interest and any sums payable in relation to early repayment as provided in the mortgage offer, we may charge you for services we provide, activities we carry out and to cover costs and losses we may occur.

They still get the monthly mortgage payment each month plus if I default then they`ll get the house in the same way they would if I actually lived in it (as per the standard AST tenancy agreement). And it doesn`t actually cost them anything more and they don`t lose anything extra when I decided to let the property. They don`t care as long as they get the money each month.

No matter which way I look at this is it seems completely unethical and most likely breaks the T&Cs of the mortgage contract.

KarenBB

I think you've found the bit in the T&C's that says N'wide can introduce this 1.5% loading tombooth. Your posts quotes 4.8 'we may charge you for services we provide' - N'wide are going to start charging 1.5% for their permission to let the property - the service they are providing. It's not costing them anymore for you to have the mortgage with that consent but reading he t&c's you've posted it looks like as they're providing that service they can charge you for it. Whilst I can see why they are doing it I can also see why someone on a fixed arte mortgage with early repayment charges isn't at all happy about it.