Mortgage provider changing terms - my rights?

siber

Dear all.

I was wondering whether anyone has some experience in the area of mortgage providers changing the terms of my mortgage agreement. Essentially, given that I don't want this change to happen, I want to know whether I have any rights to refuse the change.

Essentially, my mortgage is a tracker mortgage. If the BoE changes the base rate before the 10th of the month, the change is applied to my mortgage on the 1st of the following month. If the base rate changes on or after the 10th, the change is applied on the 1st of the month after the following month. i.e. if the BoE changes the rate on Oct 31st, the change is applied on the 1st Dec.

However, since my provider (Britannia) merged with the Co-op, they've just sent me a letter saying that they're 'bringing all the systems into alignment' (a clever way of saying 'changing things') and that now the system is changing. From Nov. 1st, if the BoE rate changes, the change is applied on the 1st of the following month regardless.

Under the new system, there will not necessarily be a payday (I'm paid mid-month) between the change and the next mortgage payment, and given that the chances are that the BoE base rate will be heading up at somepoint - it can't go down much further! - I feel that this will leave me open to the possibility of having to make a larger payment without time to plan. This will either lead me to be forced to use an unauthorised overdraft, or go into arrears, both of which will incur charges.

So my question is this: Can I refuse to move the the new scheme, as I don't agree to the change? I spoke to the customer service team, who stated that they're allowed to make this change because it was outlined in the explanation document sent to me when the merger was going through. But I don't see how this allows them to change my contract without my consent. I've been through the small print of my mortgage agreement, and this only allows changes under certain conditions, of which "we want to standardise the system because we merged" isn't listed.

As part of my complaint, I've asked Britannia to write to me explaining the legal basis by which they can change my T&Cs without my consent, but that'll be weeks. In the meantime, does anyone have any similar experience? Do I have the right to refuse the change?

I mean, I can't just dream up a change to my agreement for something that's unspecified! (Perhaps I'll add a clause that says that they should send me a bottle of champagne every month - the agreement doesn't say anything about not supplying champagne, or adding random champagne clauses if it makes life easier for me!)

Any advice or comments appreciated! Cheers!

Siber

kingstreet

I don't think this will have any great impact on you TBH.

The BoE MPC meeting is normally on the first Wednesday and Thursday in the month, so any change is likely to take place from the 1st of the following month anyway.

Looking at the future dates on the MPC's site, the only meeting which would fall outside the 10th is the Jan 2012 meeting which takes place on January 11th & 12th.

siber

Hi Kingstreet,

I appreciate your reply, but I'm aware that the BoE can meet anytime if necessary. The point is, I like the fact that I currently always have (guaranteed!) a payday between any BoE change and my mortgage payment going up, meaning I can plan my money and avoid going over the edge, bank charges etc. I can keep it all together.

Under the new scheme, that's not the case. And given the uncertain economic times, can we be sure that the BoE won't have an extraordinary meeting called? In this case, I'll be over the edge if I can't do some panic shuffling/appealing to bank-of-mum-and-dad, etc.

Also, it's the principle. If they can randomly insert clauses that I haven't agreed to, can I do the same? That champagne clause is tempting! :rotfl:

dunstonh

. I've been through the small print of my mortgage agreement, and this only allows changes under certain conditions, of which "we want to standardise the system because we merged" isn't listed.

Does it state in there what date they will use? i.e. is this a contractual change or a policy change?

To be honest, I think you are spending too much time on it and going a bit over the top. It is going to make virtually no difference to you one way or the other.

This will either lead me to be forced to use an unauthorised overdraft, or go into arrears, both of which will incur charges.

Isnt that a bit extreme?

Thrugelmir

siber wrote: »

Hi Kingstreet,

I appreciate your reply, but I'm aware that the BoE can meet anytime if necessary. The point is, I like the fact that I currently always have (guaranteed!) a payday between any BoE change and my mortgage payment going up, meaning I can plan my money and avoid going over the edge, bank charges etc. I can keep it all together.

Under the new scheme, that's not the case. And given the uncertain economic times, can we be sure that the BoE won't have an extraordinary meeting called? In this case, I'll be over the edge if I can't do some panic shuffling/appealing to bank-of-mum-and-dad, etc.

Also, it's the principle. If they can randomly insert clauses that I haven't agreed to, can I do the same? That champagne clause is tempting! :rotfl:

Change your mortgage provider if you want certainty. Alternatively overpay your mortgage every month so that any increase in interest rates has a progressively minimal impact.

alexlyne

aside from the 'principle' matter (which is fair enough), unless you have a multi-million pound mortgage, or they bump the rate up to 20% or something, then I would think that you'd be out of pocket by around £20 (finger in air) - and as stated before it would only be in extreme circumstances (extreme = rare). And if that £20 was the start of the spiral to bankruptcy then you certainly have more pressing issues to deal with!

siber

I agree that this is mostly about the principle, as the amount I will pay is unlikely to be wildly different. However, it's not fair that they simply change the terms of our agreement unilaterally to save themselves a few quid, and making it (slightly, admittedly) more likely that I'll end up without enough in the bank to make the payment. I'm not over the edge, but I wouldn't say that I'm completely secure. I plan what I'm doing with my money each month, ensuring that I can pay my (predictable) mortgage payment.

The point is, I like the way it is, it's all set up so that I don't have to worry about it, and it works! What right to they have to go and change it just because the company merged with another?

kingstreet

The simple question is, does your original mortgage documentation say they have the right to alter the rate setting mechanism? If it does, they are free to do so as long as they give you the required notice. If it doesn't you could make a representation to have it remain unaltered.

Thrugelmir

siber wrote: »

However, it's not fair that they simply change the terms of our agreement unilaterally to save themselves a few quid,

Most likely thousands.

However, since my provider (Britannia) merged with the Co-op, they've just sent me a letter saying that they're 'bringing all the systems into alignment' (a clever way of saying 'changing things')

As they'll be moving all customers onto the Co-Op computer system. Seems reasonable in this context. As to programme the system with new variables would incur huge cost.

If rates fall in the future then you would benefit likewise. Swings and roundabouts.