Buy-to-Let Mortgage Arrangement Fees

OooSoo

At present I own a second property that I rent out. It was originally my home, and when I moved I was granted permission to rent out my house by the Halifax for 3 years. The T&Cs of my Mortgage were not changed.

However, I forgot all about the 3 years, and the Halifax never contacted me either. Now after 8 years (I have never missed one payment in 14 years of owning the property!) they have written to me insisting that I move onto one of their 2 Buy-to-Let Mortgage products (Interest Only or Repayment).

Although I don't have an issue with this because it only adds £10 a month to my small mortgage of £25k, I object to the out of proportion Mortgage Arrange Fee - which stands at £999 or £599 respectively.

I have asked the Halifax for an explanation as to: why I have to be moved onto this; why it has taken them years to contact me; why they are only giving me a few weeks to make up my mind; and why the Fee is so out of proportion to the amount borrowed?

So far the Halifax have not been able to explain this, accept to say that this is the fee for a Buy-to-Let Mortgage. The Halifax won't budge, they won't even consider an Administration Fee instead? If I don't accept then there is a 1% penalty! I know I can move lender, but they all charge similar fees.

I understand that most lenders charge a fee - but isn't it time we looked again at value for money/customer service. It wasn't long ago that Unauthorised Overdraft Bank Charges were considered the norm?

I cannot see what I am gaining here, apart from an increase in my mortgage, a large one off payment, which doesn't give me any benefits at all.

I am writing to the Ombudsman, and a Conveyancing Solicitor for more guidance. But I would appreciate you looking into this, because I can't believe I'm the only one this has happened too? Plus from the consumer's point of view borrowing £25k or £250k doesn't appear to affect the Mortgage Arrangement Fee one bit!!!!

opinions4u

OooSoo wrote: »

At present I own a second property that I rent out. It was originally my home, and when I moved I was granted permission to rent out my house by the Halifax for 3 years. The T&Cs of my Mortgage were not changed.

However, I forgot all about the 3 years, and the Halifax never contacted me either. Now after 8 years (I have never missed one payment in 14 years of owning the property!) they have written to me insisting that I move onto one of their 2 Buy-to-Let Mortgage products (Interest Only or Repayment).

You are letting the property. This is a commercial arrangement on a residential mortgage. They have every right to make such a request.

Although I don't have an issue with this because it only adds £10 a month to my small mortgage of £25k, I object to the out of proportion Mortgage Arrange Fee - which stands at £999 or £599 respectively.

It's not an arrangement fee. It's a product fee. It's part of the overall cost of the mortgage product.

I have asked the Halifax for an explanation as to: why I have to be moved onto this

See above.

; why it has taken them years to contact me;

Count your blessings. Don't encourage them to backdate the 1% added rate you refer to.

why they are only giving me a few weeks to make up my mind;

You've had several years to move this to a buy-to-let mortgage and chosen, as I would have done, to keep quiet.

I understand that most lenders charge a fee - but isn't it time we looked again at value for money/customer service. It wasn't long ago that Unauthorised Overdraft Bank Charges were considered the norm?

Unauthorised overdraft charges are still considered the norm. Not sure what your point is. As for you value for money point, they never asked for you to let the property out. That was your choice.

I cannot see what I am gaining here, apart from an increase in my mortgage, a large one off payment, which doesn't give me any benefits at all.

It's not about you "gaining". It's about you paying market rate for your long term BTL property. If you don't like it you can find another lender elsewhere.

I am writing to the Ombudsman, and a Conveyancing Solicitor for more guidance.

Save time. Ring them.

You got lucky for several years. Now is the time for you to pay the market rate for your career as a landlord.

holly_hobby

Your mortgage is no longer residential - it is a semi-commercial loan and has been for 8 years. And as you have said yourself, the fee being requested is the mean for the BTL market - so little point in your moving lender.


The fact that Halifax have let you remain on a res basis and rates for 8 yrs, is actually rather lucky, as it tends to be a 3 yr max on CTL arrangement (as you yourself commented on), before making the mortgagor switch or move to a traditional BTL product. So you have enjoyed a further 5 yrs of intrest rate savings, over what you were entitled to - without Halifax requesting for the shortfall in the correct payments to be addressed.


FOS won't have any input in this, in fact I would wager that they will raise the 5 yr ex-gratia point noted above, as an offsett to the legitimate fee being requested.

The fee is the fee I am afraid.

Sorry not what you wanted to hear

Holly

Edit - crossed with O4U who has raised same/similar issues

JQ.

Be thankful you're not having to take a true Commercial Property Loan, the rates would make your eyes water.

holly_hobby

This particular scenerio would only ever be classed as a semi-commercial (on a banks commercial matrix), as it is not a industrial premisis/space with enterprise use (but a classified residential property with/for private individual residency).

But the days when BTLs were still formally classed as semi comm's (before ARLA scheme) - the loading would certainly be circa 0.50% -1.00% & a fee of around 1%.

Anyway, doesn't change the facts we have to hand, that the OP has been lucky with the charging rate, and only now has been requested to have the mge administered in its correct guise.

H

Mrs_Z

Count yourself lucky - I would have looooved to have even a fee of £999 on my BTL property - instead it was 2.5% of the loan sum. Still hurts when I think about it.

dunstonh

I am writing to the Ombudsman, and a Conveyancing Solicitor for more guidance.

Waste of time and money.

Nothing wrong here other than the fact they took longer to raise the issue with you than they should have and as you have benefited from it financially, there really cannot be a complaint to answer.

mynameisdave

I've just paid over 1% above standard BTL interest rates to avoid paying 3.5% fee for arranging a BTL mortgage.

I'm not sure exacltly what you want them to explain - why they think they have a right to charge you the same as eveyone else for using the same lending?

holly_hobby

Do you know, I rememberd answering something v similar to this earlier the year ... so I tracked back (thinking it may be the same poster), and altough a different poster, it was again a Halifax case, whereby CTL had been granted for 3 yrs, but H had inadvertenantly left it on residential rates for a whopping 11 yrs, before they discovered their blunder !

The OP in that case was very unhappy, not that she had been left on res terms for 11 yrs, but that Halifax now had the cheek to not only want to change mge to BTL and effectively add a loading to her payrate (nb -without them asking for the repayment of lost interest for the earlier yrs), but to also levy a BTl fee of £999 to boot - which she was furious about !!

Well as you can imagine, the answers received then, somewhat mirror what we have seen here.

What does strike me, is that Halifax are extremely lax in the management of their CTL book.

Holly

jamesd

OooSoo wrote: »

Now after 8 years (I have never missed one payment in 14 years of owning the property!)

That's very generous of them! You should be smiling, you've been getting a great deal compared to typical BTL.

OooSoo wrote: »

they have written to me insisting that I move onto one of their 2 Buy-to-Let Mortgage products (Interest Only or Repayment).

Although I don't have an issue with this because it only adds £10 a month to my small mortgage of £25k, I object to the out of proportion Mortgage Arrange Fee - which stands at £999 or £599 respectively.

That's eminently reasonable for a BTL fee and it seems that the interest rate is also reasonable. I suggest that you accept their kind offer or pursue one of the other BTL products available.

As you have noticed, BTL products reflect the higher risk in homes that aren't occupied by their owner with higher fees and higher interest rates, with a 0.5% to 1% premium over normal residential rates common.

OooSoo wrote: »

why the Fee is so out of proportion to the amount borrowed?

What is the approximate amount borrowed? If it's more than say £30-40,000 it's OK, else you might want to look for a fee that is set as a percentage of the amount being borrowed.

OooSoo wrote: »

If I don't accept then there is a 1% penalty!

That's completely normal for permission to let situations and they could as easily have charged that from the first day that they gave permission.

OooSoo wrote: »

I cannot see what I am gaining here, apart from an increase in my mortgage, a large one off payment, which doesn't give me any benefits at all.

You have a BTL business and they have been providing you with inexpensive financing for it. Businesses have costs, this is one of them for this type of business.

OooSoo wrote: »

I am writing to the Ombudsman, and a Conveyancing Solicitor for more guidance. But I would appreciate you looking into this, because I can't believe I'm the only one this has happened too? Plus from the consumer's point of view borrowing £25k or £250k doesn't appear to affect the Mortgage Arrangement Fee one bit!!!!

That's a complete waste of time. They have been treating you generously and do not deserve hassle that will result in no satisfaction for you.

Take a step back, recognise that what you've been doing is operating a buy to let business and accept one of the appropriate loans for this activity. Or sell the property if you prefer.

If you haven't been handling the tax for this it would also be good to start learning about how tax works for BTL properties so you can let HMRC know what's been going on. The interest is deductible from rental income, as are some other expenses, but not capital repayments.

Have you nominated one of your properties as your principal private residence? There's a potentially substantial capital gains tax bill to save by getting this right. You'd get letting allowance plus principal private residence relief for time there plus three years after you stopped living in the place if you nominated your current place, the most likely situation. Principal private residence relief is what stops people having to pay CGT on their own home for the time in which they live in it, it doesn't apply to other homes they may own.

If you have another property that you live in you may well find it cheaper to increase borrowing on that. Residential rates are usually lower than BTL.

getmore4less

If they have given you a choice.

BTL with fees at what rate or
a penalty of 1% on the £25k what rate does it make it?

Work out the cheapest and take their kind offer.