Bank seems to be extending my Fixed Rate by 3 months - can they do this?

luckyfool

Your agreement doesn't say you will make 24 payments. It says your mortgage rate is fixed until date x, and if it completes on such and such a date you will make 24 payments. Granted your broker should have explained this more thoroughly to you, but your original illustration, and later mortgage offer explain it in plain English.

DiamondJoe

luckyfool wrote: »

Your agreement doesn't say you will make 24 payments. It says your mortgage rate is fixed until date x, and if it completes on such and such a date you will make 24 payments. Granted your broker should have explained this more thoroughly to you, but your original illustration, and later mortgage offer explain it in plain English.

Actually it does, I've got it in front of me: "Your first payment will be £xxxx followed by 23 monthly payments at a fixed rate of 6.69%, followed by 372 monthly payments at a variable rate".

herbiesjp

What does section 4 of your offer letter state?

luckyfool

DiamondJoe wrote: »

Actually it does, I've got it in front of me: "Your first payment will be £xxxx followed by 23 monthly payments at a fixed rate of 6.69%, followed by 372 monthly payments at a variable rate".

Well assuming you have not selectively omitted the part where it specifies an assumed start date then you might have a case.

However looking at a C&G mortgage offer for a client of mine that started at the end of 2008, I think you have omitted the line above which states that "This offer assumes that the mortgage will start on XYZ date" within section 4. Then if you go back earlier in the offer to section 2 I am sure it will also specify there that your deal is "A rate fixed at 6.69% until xyz date, followed by the standard variable rate currently 5.5% (guaranteed to be no more than 2% above bank base rate) until the end of the mortgage term."

DiamondJoe

luckyfool wrote: »

Well assuming you have not selectively omitted the part where it specifies an assumed start date then you might have a case.

However looking at a C&G mortgage offer for a client of mine that started at the end of 2008, I think you have omitted the line above which states that "This offer assumes that the mortgage will start on XYZ date" within section 4. Then if you go back earlier in the offer to section 2 I am sure it will also specify there that your deal is "A rate fixed at 6.69% until xyz date, followed by the standard variable rate currently 5.5% (guaranteed to be no more than 2% above bank base rate) until the end of the mortgage term."

It states "This offer assumes that the mortgage will start on 01/02/09". And in section 4 it does state that the rate is fixed until 28th Feb 2011 (as I've stated in earlier posts).

My point was that as the mortgage started 2 months earlier, I would have thought the bank would have taken account of this and adjusted the end of the fixed rate term. I am clearly mistaken, as has been pointed out. Another 3 months of interest from me is in their interest, forgive the pun. My assumption is based on the clear statement in my agreement that I will make 24 payments at a fixed rate. It seems this is in fact not the case and the expiry date, based on an incorrect start date, overrides this statement, and there's little I can do about it.

herbiesjp

It does not matter when the mortgage starts though.

The fixed rate will always end on that date.

There are some lenders that do a flat 2 years from completion, but your deal is not one of those.

It is one you will have to put down to experience and move on.

DiamondJoe

herbiesjp wrote: »

It does not matter when the mortgage starts though.

The fixed rate will always end on that date.

There are some lenders that do a flat 2 years from completion, but your deal is not one of those.

It is one you will have to put down to experience and move on.

That's what I didn't know. And yes, I'll be letting this one go, though it still seems odd that 2 parts of an agreement can contradict one another.

luckyfool

Its not about them gouging you for more interest for an extra 3 months, its about the contract you signed. You applied for a fixed rate because you wanted peace of mind. Lenders use fixed end dates generally (with a couple of exceptions like Nationwide) because they buy in Fixed rate funding with specific end dates and its just the way they fund the mortgages. If interest rates were up at 9% now and your SVR would be 11% you would be benefiting from these extra few months. Fixed end dates on products assume that a mortgage will take 3 or 4 months and try to give most customers around 2 yrs (or 3 or 5yrs) of a fixed rate based on the average time taken from start to finish. For a straightforward remortgage or very quick purchase you might end up with 26 or 27 months fixed, if its a new build and it takes 6 months you might only be fixed for 21 or 22 months. With hindsight a Nationwide mortgage would have given you exactly 24 months from completion, however at the time it could be that their 2 yr fixed rate was 0.2 or 0.3% more expensive than C&G.

herbiesjp

The offer letter has to assume a start - it does not know the actual start.

So that is where the issue arises - however, as it is an assumption, it is subject to change.

WestonDave

For your own peace of mind it might be worth considering whether you would have been worse off if they'd made you wait until the assumed start date before starting the fixed rate - 2 years ago being stuck for 3 months on SVR after the run off of another deal may well have cost more than the perceived overrun at this end of the deal. That might offset your irritation at this apparent contradiction.