Nationwide Mortgage - new fees and charges

seraphina

tombooth01 wrote: »

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.

Don't be naive, they do care. By granting consent to let, the risk profile for the lender changes substantially. They are no longer just subject to a contract between the original borrower and themselves with the house as collateral for the loan; they now have to honour any legal agreement between the landlord and the tenant, they effectively have to share their collateral for the loan with the tenant, whom the law grants rights to.

And if you don't like it, then sell the house or move the loan, or move back in. It's not Nationwide's problem, or any other lender's problem if the numbers don't work for you, and why should an innocent tenant get screwed over in the process?

There are very few other situations where borrowing large sums of money is treated in such a cavalier fashion. Don't expect any special treatment just because it's a mortgage. The banks and building societies are a business - they're not in it to help you out, nor should you expect them to....

loopy-juice

seraphina wrote: »

Don't be naive, they do care. By granting consent to let, the risk profile for the lender changes substantially. They are no longer just subject to a contract between the original borrower and themselves with the house as collateral for the loan; they now have to honour any legal agreement between the landlord and the tenant, they effectively have to share their collateral for the loan with the tenant, whom the law grants rights to.

And if you don't like it, then sell the house or move the loan, or move back in. It's not Nationwide's problem, or any other lender's problem if the numbers don't work for you, and why should an innocent tenant get screwed over in the process?

There are very few other situations where borrowing large sums of money is treated in such a cavalier fashion. Don't expect any special treatment just because it's a mortgage. The banks and building societies are a business - they're not in it to help you out, nor should you expect them to....

This post sum up exactly why this nations people gets rolled time and time again. Turn the lights off on the way out......

Vincenzo

seraphina wrote: »

And if you don't like it, then sell the house or move the loan, or move back in. It's not Nationwide's problem, or any other lender's problem if the numbers don't work for you, and why should an innocent tenant get screwed over in the process?

I wonder if this would be your atttude if they added a 0.5% charge to residential mortgages because the costs of administration of defaults needed to be covered? Oh and they did this half way through your 5 year fixed rate, so you were stuck with them.

Your point about increased risk on BTL etc is valid but the important issue here is that Nationwide has fundamentally changed the terms of the loan (sorry 'fees and charges'!). The 1.5% increase is punitive and does not refect their costs or risk, it is purely an attempt to raise funds by a financial institution that has mispriced their own risk and mismanaged their own business.

They have targeted those letting their properties because they feel they can get away with it. If they had substantially increased the fees on resi mortgages for owner occupiers there would have been a big media frenzy. They have priced it well too, at a 1.5% premium it is likely most will still be better off staying with them than moving to a BTL loan, particularly when you take into account fees on BTL mortgages at the moment.

But yes, as you say, everyone should roll over and take it and wait to see what they, or some other bank or building society try to get away with next......

PiggyBank01

The fact of the matter is most of us understand why there are doing it, but it's the fact they`re moving the goal posts for people even when they were on a fixed rate product.

I would bet that 9 out of 10 T&Cs of any contract probably has the terms saying that they can vary whatever they want blah blah. But not many companies would be so blantely unfair against those who are financially locked into a product.

Yep may be I`m naive to think that a big company such as Nationwide would be fair but it doesn`t stop me from trying to get them to realise/come to an agreement. That's one thing this site has taught me - NOT to just roll over and take it. More fool you if that's your advice :T

I`ve contacted Nationwide regarding the understanding I had when I both received 'Consent To Let' (i.e. no 3 year limit was mentioned at that point) and when I was sold a fixed product by their staff which is longer than this new time limit.

I`ve put to them that if they don`t want the 'risk' of accidental BTLs then let those who are on a fixed product and who don`t want to pay the new monthly +1.5% penalty leave without having to pay the EPC.

Tank7

Solent

I think I will be using your letter and amending where needed.

I have been letting my property out for 3 years this October so will be shafted by the new rate very soon. My tenant will be getting a letter, along with a copy of the Nationwide letter, stating their rent will be going up as from the 1st October.

This is my only property and I am not some property tycoon. I also object to the fact this increase of 1.5% is also going to be added to 'any other mortgages or laons ont eh property' so I have two other small loans for home improvements that will also incur increases.

As stated I do not see where there extra risk is and feel this increase totally unaccetable.

I agree that if I default they will have issues with any tenants who are in the property but as long as I keep paying the mortgage, and the tenant keeps paying me, there will be no issue. If they increase by 1.5% and my tenant refuses to pay extra then Nationwide will have increased their risk by they own doing as they are now asking for way too much extra!

My knee jerk reation is to get the tenant out and flog the house, pay off the mortgage, run off into the sun and stick two fingers up to Nationwide!!!

Please keep us posted on any replies from them to your letter as if one of us gets a result then we all will!

seraphina

Tank7 wrote: »

Solent

I have been letting my property out for 3 years this October so will be shafted by the new rate very soon. My tenant will be getting a letter, along with a copy of the Nationwide letter, stating their rent will be going up as from the 1st October.

Please bear in mind that you cannot just unilaterally increase the rent for your tenants - for example if you have increased the rent in the last year I don't think you can increase it again within a year. Whatever you have to pay on your mortgage is irrelevant for your tenants, who presumably are paying rent at a reasonable market rate. They may also choose to refer any proposed increase in rent to the council Rent Review board (or whatever it's called).

Might I suggest you pay a visit to the landlordzone.co.uk forums? They are very helpful usually.

Thrugelmir

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.

Letting of a property whilst under a residential mortgage is at the discretion of the lender. If you decide to let your property on a long term basis then it is a fundamental change to the contract. As the lender would not have advanced you the money in the first place. unforntunately by not complying with the terms of the contract it is you that is in breach.

Thrugelmir

Tank7 wrote: »

My knee jerk reation is to get the tenant out and flog the house, pay off the mortgage, run off into the sun and stick two fingers up to Nationwide!!!

You make yourself sound like an amatuer rather than a professional landlord. Just the reason the N/W is changing the rules. Too many amateur BTL's are very marginal in profitability terms. When interest rates rise in the future, which they will, many will be flushed out. So think of it as N/W doing you a favour.

Vincenzo

Thrugelmir wrote: »

Letting of a property whilst under a residential mortgage is at the discretion of the lender. If you decide to let your property on a long term basis then it is a fundamental change to the contract. As the lender would not have advanced you the money in the first place. unforntunately by not complying with the terms of the contract it is you that is in breach.

I don't believe this is the case at all. The T&Cs state that consent to let will not be unreasonably withheld, therefore it is not at the discretion of the lender. If they refused consent they would have to show it was reasonable to do so.

Nationwide have not indicated they will try to withhold consent at all, merely that the fees for doing so for more than a 6 month period (in future) will incur these charges.

The argument many are making (rightly in my view) is that these charges are unfair when a mortgage holder is tied into a fixed period and had no way of anticipating such a large increase in cost.

Solent_2

Thrugelmir wrote: »

... If you decide to let your property on a long term basis then it is a fundamental change to the contract. As the lender would not have advanced you the money in the first place. unforntunately by not complying with the terms of the contract it is you that is in breach.

With respect, you don't know what you are talking about. There is no fundamental change to the contract - the existing contract specifically allows for letting with the permission of the lender, which I was given. The lender advanced the money to me on the basis that I could ask to let, which I did. The contract is the same, it is clear, and I have not breached it. Have you even read it? :think: