Nationwide Backs off on consent to let charge

Fuzzyness

As posted previoulsy Nationwide were proposing to charge 1.5% over and above the fixed rate on those mortgages where people are currenlty letting out their properties. We are such a couple who were facing an additional charge over approximatley 300 quid a month over and above what we currently pay when our consent to let perior ran out. In advance of this we have looked at remortgaging and paying a substantial exit fee (circa 7k) in order to benefit from a lower interest rate on a specific buy to let mortgage instead. we were due to exchange on our new mortgage today. We got home yesterday to find a letter from nationwide saying that they had changed their mind and that they are no longer planning on adding this charge until the period after we would be hit by early repayment charges i.e. not until our fixed period was over.

now this is a bit of a result as we dont have to pay the exit charge but the only way we've been able to achieve this is by nearly getting to the point of exchanging on a new mortgage. it'll cost the deposit on the new mortgage and some other bits and pieces but small beer in comparison to the 7k we would have had to pay.

thankfully when i filled in the application for the new mortgage i said I would inform the solicitor when i wanted to exchange rahter than jsut lettign them get on iwth it. if they had we could have lost out big time.

so why its been a bit of an unfortunate experience with nationwide we'll see out our fixed term with them and then seek a proper buy to let mortgage in due course.

and who have sougth consent to let from the lender may recall the 1.5% charge that nationwide were going to levy

paulfelce

It's quite a result.
It does seem they are only waiving the extra charge while a mortgage is on a fixed or tracker rate. Mainly because it's 'unfair' that people will be penalised with an early repayment charge to change to a mortgage that doesn't include the extra 1.5%

I would suggest they are reacting to losing a lot of new landlords who are moving their mortgage. The original reasoning that there is added risk, especially as this only kicks in after three years does seem odd.

Also if they genuinely believe that
a) let properties are more risky
and
b) people are tied to the extra charge because of the early repayment charge

then wouldn't they be better off waiving the early repayment charge.

I'm not complaining , I've got the main portion of my mortgage that's lapsed on to their nice low standard rate, and a small further borrowing that's fixed. Their new rules mean I don't have to pay the 1.5% on any of the mortgage. :beer:

Thrugelmir

paulfelce wrote: »

I
I would suggest they are reacting to losing a lot of new landlords who are moving their mortgage. The original reasoning that there is added risk, especially as this only kicks in after three years does seem odd.

The imposition of a charge whilst the product is in a fixed term would be unreasonable. As it forces the borrower to pay an early redemption charge in order to remortgage. If the charge had remained in place then no doubt numerous complaints would have been lodged.

The NW was not reacting to a loss of business.

Fuzzyness

i'm quite happy that they did change their mind. probably will move the mortage at the end of my fixed deal anyway to put it onto a proper buy to let product as have no plans to move back into the house in the near future.