consent to lease fee, massive increase!!

btl1967

Hi, my mother has a property which is let out. The mortgage is with The Mortgage Business and has consent to lease. The charge for consent started at £75 per year, this was then increased after the first year to £25 per month (I thought that was a ridiculous increase). However in Sept 2011 they increased it to £400 per month and from May 2012 it will be £800 per Month!!!

Obviously this is a ridiculous increase. My Mother has spoken to several mortgage advisers who, because of her fixed low mortgage rate ( 1% over base tracker until 2015) have advised not to do anything as this may rock the boat and the mortgage company may increase the interest rate.

Has anyone had any experience of this? Can the mortgage company (part of Halifax BTW) actually just increase the interest rate.
Obviously we could go to the ombudsman service but don't want to start something that may end up with even higher costs if the mortgage company can increase the mortgage rate or even the consent to lease fee still further. Thanks.....

Thrugelmir

Has the property been let for over 3 years?

The monthly charge you refer to is the mortgage payment I assume.

Fuzzyness

nationwide tried to do it. they didnt change the fixed rate interest charge but attempted to add an additioanl charge to our mortgage. needless to say caused a right outcry and they backed off until people on fixed rates had finished. the additioanl charge is only to be applied at the end of our fixed rate, not that we'll be staying with them as intend to put the house on to a propert BTL mortgage. search on here for nationwide and interest rate increase.

holly_hobby

If you effected a residential mortgage with TMB, then sought their consent to let, (as they were really a niche lender when I knew them, likes of buy to let, let to buy, adverse credit mortgages ), then I am afraid you are working off plan as it is. That means that they may impose in reality any fee they wish, as you are already outside of your contractual t&cs as it is.

Now, they may well fall foul of the unfair relationship test - but the argument would be that you are being granted flexibility with the CTL, and if you aren't happy go and seek a traditional BTL lender and mortgage.

There have been several recent threads regarding HBOS (now part of the Lloyds Banking group) all of a similar vein and in relation to CTL, and increased fees/rates etc.

My honest view, the charges are designed to make you jump ship (as Lloyds want to reduce the exposure inherited from HBOS with this sort of business), and move to another lender.

If you choose to stay and pay the fee, well thats all the more profit for LLoyds ... I can only see one way this fee is going to keep going ... choice is yours how long you want to be exposed to it ..

As a point of interest, there are some fee free BTL remortgage deals about, you would need to crunch some numbers to see if moving to another lender and bearing in mind any ERPs etc from your current deal, will be beneficial for you. Or even with the huge fee, its better to stay with Halifax for the time being, until you're out of penalties and then make a run for it .. !

Don't feel that you're being solely targeted .. you're not ... it appears to be right over across the group that current CTLs are being squeezed out, as an proactive exercise by Lloyds to reduce the inherited exposure in this area.

If you spend an hour or so with a whole of market broker, they will help you evaluate your best course of action, and if appropriate - source the most suitable lender and product for you, whilst supporting your throughout the whole application process and beyond ...

Hope this helps

Holly

opinions4u

btl1967 wrote: »

Hi, my mother has a property which is let out. The mortgage is with The Mortgage Business and has consent to lease. The charge for consent started at £75 per year, this was then increased after the first year to £25 per month (I thought that was a ridiculous increase). However in Sept 2011 they increased it to £400 per month and from May 2012 it will be £800 per Month!!!

Please clarify what they have described these charges as.

Fees?

Interest rate change?

Obviously this is a ridiculous increase.

Not necessarily. If it was taken out as a residential mortgage and is now a commercial arrangement, it's not totally unreasonable for them to apply commercial terms.

My Mother has spoken to several mortgage advisers who, because of her fixed low mortgage rate ( 1% over base tracker until 2015) have advised not to do anything as this may rock the boat and the mortgage company may increase the interest rate.

So how have they described the additional costs. This is quite important.

Has anyone had any experience of this? Can the mortgage company (part of Halifax BTW) actually just increase the interest rate.

It depends on what the T&Cs say about letting the property out. Very often there will be some flexibility that entitles them to charge additional interest in these circumstances.

Obviously we could go to the ombudsman service but don't want to start something that may end up with even higher costs if the mortgage company can increase the mortgage rate or even the consent to lease fee still further. Thanks.....

While you probably can go to the FOS, many commercial arrangements are outside their scope. So it's not a certainty. And they may rule against you.

That said, the additional charges sound quite drastic.