Can a lender change the terms of mortgage after completion?

djc24

We had our offer & completed in December 2010.

We had ported 2 rates, tracker and a fixed rate & topped up with a new fixed rate.

The ported fixed rate expires at the end of this month & we have been advised that it will mature onto a different product (& higher one) than stated in the offer.

Can the lender do this ?

The_Palmist

Read the small print, in most cases yes they can. You might have the option to opt for a different product with lower interest rates.

Thrugelmir

Are you referring to the fact that your lenders SVR ( Standard Variable Rate) is now higher?

GMS

What does the offer say?

Is it something along the lines of 'will revert to Standard Variable Rate, currently x%'?

May be that the quoted rate was correct at the time of the offer but has now changed.

djc24

the offer states that the fixed will revert to the variable home loan rate (this tracks the base rate, product was withdrawn)

letter states reverting to standard variable rate.


they are 2 separate products, yes the payment would change if the BoE rate changed, but by different amounts!

Thrugelmir

Who is your lender?

GMS

Standard Variable Rate has no link to Bank of England Rate (in general) and can be amended at the discretion of the lender. There were lenders who had a cap on SVR as in guaranteed never to be more than x% above base but this was not the norm.

If your offer states that the revert will be B of E + x% then this is what it will be.

If it says revert to a SVR of x% which is currenly x% above Bank base then it can be amended at the lender's discretion.

djc24

Cambridge BS

Thrugelmir

A lender can change its SVR at any time it wishes. This is irrespective of any movement in BOE base.

Many smaller building societies increased their SVR's in 2010. This was primarily in response to increased FSA levy's.

Levy's were increased to all lenders to help cover the cost of the Icelandic bank bail out to UK savers. The cost to the smaller societies was around .25%.

In addition many BS's lent on low rate trackers in the boom years. These products are now losing them money. So the cost is being passed to both new and variable rate customers to recoup..

magpiecottage

Thrugelmir wrote: »

Many smaller building societies increased their SVR's in 2010. This was primarily in response to increased FSA levy's.

Levy's were increased to all lenders to help cover the cost of the Icelandic bank bail out to UK savers. The cost to the smaller societies was around .25%.

Nobody tells the public but all this "free" protection comes at a price - primarily passing on the cost of levies in the form of higher interest rates paid by borrowers and lower interest rates paid to savers.

The FSA keeps on telling us it wants transparency but I suspect there would be an outcry if customers of sound financial institutions realised they were actually paying to bail out the victims of banks they had never even heard of before they went down the pan.