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

DiamondJoe

luckyfool wrote: »

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.

I hear what you're saying but I don't think "its just the way they fund their mortgages" is fair to the customer, and whether or not I would benefit from an extra few months on a fixed rate is irrelevant to the principle at hand here. I think if you sign up to a 2 year fixed rate, it should be what it says on the tin - 2 years, as Nationwide do (and I wish I'd known that). But that's just me.

DiamondJoe

WestonDave wrote: »

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.

It may well have done. But that's irrelevant with regards to the principle of this. The money isn't the issue, I just like things to do what they say they will. Anyway, I'm over it now.:mad:

DiamondJoe

herbiesjp wrote: »

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.

Absolutely, I can see that. My question is, as it is clearly subject to change and based on an assumption, why would the bank not take this into account and adjust the end date accordingly once the mortgage has started? It would seem to me that this would be the fairest way all round - the customer pays their 2 years worth, and there's no risk of the bank losing out on a couple of months worth of interest should the chips fall the other way and the customer end up only making 22 payments. But (in the style of Alexander Armstrong), "what dae ah knough?"

opinions4u

The only assumption is on your start date. Some customers will complete prior to this date, some customers after the date. Because every borrower is different, they can only assume when that date will be for illustration purposes.

The end date of the product is clearly spelled out. That's what you signed up to. End of story.

It strikes me as fair, and it's certainly not the case that the lender is trying to get extra money out of you at a high rate.

herbiesjp

The start date is the assumption.

The fixed rate end date is not an assumption, and is not stated as such.

So the deal actually ends on the date stated - nothing wrong with that.

Time for a cuppa me thinks.

DiamondJoe

opinions4u wrote: »

The end date of the product is clearly spelled out. That's what you signed up to. End of story.

Ye-es, but so is "you will make 24 payments". I also signed up to that. Hence my grumble.

GMS

DiamondJoe wrote: »

Ye-es, but so is "you will make 24 payments". I also signed up to that. Hence my grumble.

If you had completed on the ASSUMED start date you would have made exactly the amount of payments stated on the mortgage offer.

If you had chosen to wait until the assumed date you would have had a delay which you clearly did not want. Was there a reason for this? Were you repaying debts with the advance? Or was it a purchase you wanted to get done asap?

Had you read the mortgage offer you would have realised the end date. You could at that point have asked the broker to go back to Nationwide and request an amended offer if you were so concerned. This would mean delaying completion and waiting for Nationwide to produce another offer.
Problems here are potentially many. Criteria may have changed meaning no new offer. Completion date may be missed meaning you would not have exactly 2 years fixed, this time short of and now needing another re offer to get the 2 years.

What was SVR at the time? It will be on the offer. Was it similar to the fixed rate?

It never ceases to amaze me how little regard people pay to their mortgage offers. It is down to a broker to explain to the clients of course, but ultimately the borrower needs to be sure of what they are signing for.

You cannot argue that the offer says you will make 24 payments. You would have done if you had stuck to the dates assumed on the offer.

Put it down to experience and move on. If you feel the broker has let you down then let them know, and find another one.

DiamondJoe

"If you had chosen to wait until the assumed date you would have had a delay which you clearly did not want. Was there a reason for this? Were you repaying debts with the advance?"

While I appreciate you taking the time to reply, I find that to be quite a personal question with more than a hint of insinuation. Why do you ask this? For the record, no I wasn't repaying debts.

In all honesty I cannot now recall why the mortgage started 2 months earlier than the assumed start date. I don't recall there being any particular reason.

"What was SVR at the time? It will be on the offer. Was it similar to the fixed rate?"

The SVR was 6.5% at the time and the fixed rate is 6.69%.

"It never ceases to amaze me how little regard people pay to their mortgage offers. It is down to a broker to explain to the clients of course, but ultimately the borrower needs to be sure of what they are signing for".

Yes I think you're right. I should have noticed this at the time but I didn't, and it never occurred to me that this was an issue that could arise. I had no knowledge of expiry dates overriding the number of payments stated in the agreement. Now I do.

"You cannot argue that the offer says you will make 24 payments. You would have done if you had stuck to the dates assumed on the offer".

See my point above about why I think the bank should take account of this.

GMS

DiamondJoe wrote: »

"If you had chosen to wait until the assumed date you would have had a delay which you clearly did not want. Was there a reason for this? Were you repaying debts with the advance?"

While I appreciate you taking the time to reply, I find that to be quite a personal question with more than a hint of insinuation. Why do you ask this? For the record, no I wasn't repaying debts.

In all honesty I cannot now recall why the mortgage started 2 months earlier than the assumed start date. I don't recall there being any particular reason.

"What was SVR at the time? It will be on the offer. Was it similar to the fixed rate?"

The SVR was 6.5% at the time and the fixed rate is 6.69%.

"It never ceases to amaze me how little regard people pay to their mortgage offers. It is down to a broker to explain to the clients of course, but ultimately the borrower needs to be sure of what they are signing for".

Yes I think you're right. I should have noticed this at the time but I didn't, and it never occurred to me that this was an issue that could arise. I had no knowledge of expiry dates overriding the number of payments stated in the agreement. Now I do.

"You cannot argue that the offer says you will make 24 payments. You would have done if you had stuck to the dates assumed on the offer".

See my point above about why I think the bank should take account of this.

I asked if you were repaying debts as this may have meant you were better off for having done so. No insinuation intended in any way.

Had SVR been the same today as it was then you would not be questioning it, or certainly not as much. Had rates increased by as much as they had fallen and SVR was 10% would you be offering to pay it earlier?

Some lenders will do 2 years from completion. Unfortunately your lender did not. The rate has an expiry date. If you chose to complete on the day the offer assumed you would have matched it to the penny. If you had chosen to complete 4 months after you did you would have less than 24 payments.

The lender have done nothing wrong. Your legal fees on the offer will be an estimate also, as this is something which cannot be quantified at the time of offer.

In order to produce an illustration there needs to be an ASSUMED date. 99 times out of 100 this will not be the actual date.

You have learnt a valuable lesson for next time you take a mortgage. Read the offer, and if in doubt clarify it with your broker or the lender.