Nationwide - changes to mortgage fees & charges

Tank7

Hi all

New to the forums here although have been a 'guest' on here for a while but I need to see if anyone can give me some info.

I rent my house out and have done for 2 years 8 months and my mortgage has never had any 'buy to let' increases applied to it, until now!!

I have received a letter advising of changes to their mortgage fees and charges and that for properties that will have been rented out for 3 years, or more, by the end december 2010 there will be an additional 1.5% added to the rate!!! They state it is due to 'extra risk and administration charges' but I fail to see what extra risk or admin charges they will have. Surely they will have the same risk and admin as if I lived in the house or rented it out?

I will be sending a letter to them telling them this and that I am not happy about the increase, taking effect from 1st October 2010.

My question is can anyone tell me what their extra costs will be as I fail to see any. I don't mind paying a small annual fee to cover the 1 extra letter I receive from them but I think they are taking the proverbial!

Has anyone else who rents out their houses received this as well??

Cheers for any advice. I know they will not change anything but at least I will have 'vented off'

Oh and the other thing that annoys me is the increase of 1.5% is on any extra mortgages or loans taken against the property so for the new windows I had and other bits that all goes up too!!! I think that is well out of order and the 1.5% should only apply to the original mortgage on the property and even that is not on.

zppp

Tank7 wrote: »

Hi all

New to the forums here although have been a 'guest' on here for a while but I need to see if anyone can give me some info.

I rent my house out and have done for 2 years 8 months and my mortgage has never had any 'buy to let' increases applied to it, until now!!

I have received a letter advising of changes to their mortgage fees and charges and that for properties that will have been rented out for 3 years, or more, by the end december 2010 there will be an additional 1.5% added to the rate!!! They state it is due to 'extra risk and administration charges' but I fail to see what extra risk or admin charges they will have. Surely they will have the same risk and admin as if I lived in the house or rented it out?

I will be sending a letter to them telling them this and that I am not happy about the increase, taking effect from 1st October 2010.

My question is can anyone tell me what their extra costs will be as I fail to see any. I don't mind paying a small annual fee to cover the 1 extra letter I receive from them but I think they are taking the proverbial!

Has anyone else who rents out their houses received this as well??

Cheers for any advice. I know they will not change anything but at least I will have 'vented off'

Oh and the other thing that annoys me is the increase of 1.5% is on any extra mortgages or loans taken against the property so for the new windows I had and other bits that all goes up too!!! I think that is well out of order and the 1.5% should only apply to the original mortgage on the property and even that is not on.

Welcome to MSE!
Because you are on a variable rate mortgage it may seem out of order, but lenders do have a right to increae their rates. It seems that rates will be increasing if the Bank of England base rate increases over the coming months. It seems as if Lloyds have also increased mortgage rates. When does your mortgage deal end?

Tank7

Thanks for the welcome and reply.

My 'deal' ended last January. I am actually on their BMR so know I have a great rate at present but feel it is out of order to start trying to recover costs from those of us who rent our houses out!!

I would like to know what risk and admin charges they have to warrant this increase as I can't see it myself.

I guess that if the BOE rate goes up as well as having the 1.5% increase I will just have to sell the house, that will be one less mortgage for them!

zppp

Tank7 wrote: »

Thanks for the welcome and reply.

My 'deal' ended last January. I am actually on their BMR so know I have a great rate at present but feel it is out of order to start trying to recover costs from those of us who rent our houses out!!

I would like to know what risk and admin charges they have to warrant this increase as I can't see it myself.

I guess that if the BOE rate goes up as well as having the 1.5% increase I will just have to sell the house, that will be one less mortgage for them!

I am afraid they would never tell you what these extra admin fees are. My point was that Lloyds have increased their rated by a similar amount according to the article. For mortgages that are buy to let, they are viewed as higher risk now than prior credit crunch.

Cool_man

Very nice post. This will help possible client to get a quality person.

izsushant

I have received the same letter. I am on Nationwide's fixed rate loan (which was changed when Nationwide bought Portman building society). Although not at present, I may have to put my home up on rent because of the current housing market condition and inevitable inability to sell when my job changes 6 months down the line.

I am on a 5 year fixed deal and as far as I know, they can't change the T&C's half way through. Do I have the right to refute this and break the contract FREE OF COST or would the early redemption fee have to be payable?

opinions4u

izsushant wrote: »

I have received the same letter. I am on Nationwide's fixed rate loan (which was changed when Nationwide bought Portman building society). Although not at present, I may have to put my home up on rent because of the current housing market condition and inevitable inability to sell when my job changes 6 months down the line.

I am on a 5 year fixed deal and as far as I know, they can't change the T&C's half way through. Do I have the right to refute this and break the contract FREE OF COST or would the early redemption fee have to be payable?

What terms and conditions have actually changed (as opposed to fees and charges)?

For example, do the original terms and conditions you agreed to give you any right to rent your property out?

I suspect by requesting consent to let the property you will actually be asking the lender to amend the terms and conditions of the mortgage, rather than the other way round.

Yorkie1

There's a long thread running on this which discusses these charges:

https://forums.moneysavingexpert.com/discussion/2470311

The mortgage interest rate isn't changing but the increase relates to the charges / admin fees as you state. If you chose to move back into the house you would not pay the increased rate.

You ask what the extra risk is. To quote ET1976 from that other thread, the risks for a lender are:

"you may have void periods.
you may have tenants who don't pay.
you may have tenants who trash the place and cause you to spend thousands on repairs.
etc.

I'm generalising, but many people with BTL mortgages rely on their rental income to pay the mortgage. This is (generally) less reliable income than that on which the lending for your own home is based (usually a job - yes I know people can lose jobs too), therefore it is a higher risk.

It's a pretty basic, widely accepted fact that BTLs are more risky for lenders than residential mortgages. "


The NW has allowed customers to maintain a non-residential property on the far more favourable residential terms for a long time; many other lenders have not been so generous and insisted on borrowers transferring to a BTL product immediately. If you're still renting a house out after 3 years then it's not really a temporary measure any longer, is it? It's become a permanent state of affairs and certainly no longer a residential property.

poppy10_2

zppp wrote: »

I am afraid they would never tell you what these extra admin fees are. My point was that Lloyds have increased their rated by a similar amount according to the article. For mortgages that are buy to let, they are viewed as higher risk now than prior credit crunch.

Nationwide do explain the new fees, and their reasons for introducing them, on their website:
http://www.nationwide.co.uk/mortgages/usefulinformation/letting.htm

Nationwide wrote:

Nationwide mortgages are designed and priced for people who live in their homes. The Mortgage Works (TMW), Nationwide's specialist lending company, design and price mortgages for people looking to rent out their property, known as Buy to Let mortgages.

The reason they are termed as specialist mortgages is because they carry an additional risk and administration cost. When properties on a Nationwide residential mortgage are rented out we too experience this additional risk and administration costs and it is only fair that those people who rent out their property should meet these additional costs rather than our membership as a whole.

If you wanted to rent out your house long term then you should have taken out a buy to let mortgage. It's unreasonable to take out a residential mortgage and then rent out your house long-term (this change only affects those renting out their house for over three years). The consent to lease is only supposed to be temporary, if your circumstances have changed and you have become a professional landlord then you need to take out the appropriate BTL mortgage, or pay the additional risk premium.

Thrugelmir

poppy10 wrote: »

If you wanted to rent out your house long term then you should have taken out a buy to let mortgage. It's unreasonable to take out a residential mortgage and then rent out your house long-term (this change only affects those renting out their house for over three years). The consent to lease is only supposed to be temporary, if your circumstances have changed and you have become a professional landlord then you need to take out the appropriate BTL mortgage, or pay the additional risk premium.

Lenders I suspect are now taking the view that "consent to let" is being abused by many. The previous Government asked for lenders to be responsible and help people through transitional times. We've had over 12 months of low interest rates and in many areas house prices have risen from the lows. So other than genuine cases where perhaps people have gone to work abroad for example. Lenders have quite rightly tightened the rules to reflect the risk of commercial lending.

Tank7

I did not intend renting it out long term but things change and so I am still renting it out.

It is my only property so not a property tycoon.

As there is another, much more lengthy, post on this subject I will continue to watch and reply to that one.

Thanks for the replies.