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Legally can my mortgage provider increase my rate if i'm on a SVR??

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I received permission to let on a property I own just over 2 years ago (this was for a period of 3 years). Due to the interest rate cut my mortgage rate fell to 2.5%. I cut my term in half to 14 years so I could pay more off. I recently received a letter from my provider (Nationwide) who informed me that at the end of the 3 year permission to let period they will be hiking up the rate by a further 1.5%!!!! Can this be legal??? What can I do?? Help please!!!

Comments

  • Peelerfart
    Peelerfart Posts: 2,177 Forumite
    Part of the Furniture 1,000 Posts Combo Breaker
    Yes it's legal and as for what can you do , well you can vote with your feet and leave them.
    Space available for rent
  • dunstonh
    dunstonh Posts: 119,697 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Combo Breaker
    You have a primary residential mortgage that they allowed you to use for a period for non primary residential purposes. You have now exceeded that period and are still not using it for the purpose you applied for. Therefore they can adjust the rate to reflect the commercial purpose that you are using it for.

    This is quite normal and many lenders do the same.

    Your option is to pay it or get yourself a buy to let mortgage rather than a primary residence mortgage.
    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • I think the clue is in the word 'variable'?
  • dimbo61
    dimbo61 Posts: 13,727 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Photogenic
    Even at 4% thats still a good rate for a BTL property and how much equity have you got in the property?
  • Thanks for the replies. It seems as tho they have me over a barrel as I don't have enough capital in the house to re-mortgage with another company. The only other thing I could do is pretend i've moved back into the property therefore it would not be a business.
  • Even if you had enough equity in the home to remortgage with another lender you would be highly unlikely to achieve a 4% variable rate on a Buy To Let mortgage product so it isn't so bad staying with Nationwide :)
  • betmunch
    betmunch Posts: 3,126 Forumite
    you could just sell the house if you dont like the mortgage rate you will be on.
    I am a Mortgage Adviser
    You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.
  • luckyfool
    luckyfool Posts: 1,683 Forumite
    ipalmer wrote: »
    Thanks for the replies. It seems as tho they have me over a barrel as I don't have enough capital in the house to re-mortgage with another company. The only other thing I could do is pretend i've moved back into the property therefore it would not be a business.

    Wonderful idea. a) mortgage fraud. b) They may increase your rate by 3% instead of 1.5% if they discover that you are letting the property without authorisation.
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