Barclays Offset Mortgage : Porting issues - mis sold !

sammyez

I have had a Barclays offset mortgage for the past 12 years (with a great rate 1.45% over base life time tracker) this also includes a substantial reserve / draw facility (£75k)

I was sold this mortgage on the understanding if was 'portable and flexible'. However, recently I have considering a house move. I enquired with Barclays about porting my current mortgage (to keep current rate, current terms & no increase in amount) to be told that :-

If I moved I would lose the draw facility completely

I could either port the rate but not the offset mortgage facility or
move to another offset mortgage at much higher 3.14% rate

I feel totally aggrieved as premier Barclays customer, who I feel has been mis-sold the portability and flexibility of keeping the draw down facility. It seems that I can only keep my good rate and draw facility if I stay in my current house, this is not what was sold to me ?

I have made a complaint to Barclays and they have refused to do anything about it. I am now contemplating contacting the financial ombudsmen to register a complaint, but wanted to know if anyone has any further advice ?

mrginge

All porting does is allow you to move the rate from one mortgage to another. Unless you have a KFI that states specifically that you are allowed to port the drawdown facility (which you won't) then barclays are doing nothing different to every other mortgage lender.

There is nothing to complain about here so going to the ombudsman will be pointless.

JimmyTheWig

While I'm not doubting what mrginge is saying is true (especially when it backs up what Barclays are saying and they are unlikely to not know their own products) there could still be room for complaint here. E.g.

OP: Hello I'd like a mortgage.
Advisor: How about this one?
OP: Looks good, especially if the Bank of England Base Rate hits an all-time low for an unprecidented length of time. But what if I want to move house?
Advisor: You can take the mortgage with you if you move house.
OP: Even the draw down facility?
Advisor: <crossing his fingers out of sight of the OP> Oh yes.
OP: Great! Where do I sign?
Advisor: <rubbing his hands with glee at the thought of having made a sale> Right here.

Surely that would have been mis-sold, regardless of the KFI? Especially if the KFI didn't explicitly state that the draw-down facility _wasn't_ portable?

Obviously it would now come down to the OP's word against the advisor's. The chances are the advisor would now say that they didn't say that the draw-down facility was portable.

And even if it was found to be mis-sold, there's probably no compensation due as it was probably still the best deal for the last 10 years.

Thrugelmir

JimmyTheWig wrote: »

OP: Looks good, especially if the Bank of England Base Rate hits an all-time low for an unprecidented length of time. But what if I want to move house?

No one foresaw the events that would unfold in 2007/08. Certainly not in 2002.

No regulator is going to become involved in commercial decisions which forces a lender to write new business at a loss.

The OP suffers no loss if they stay put and the lender is honouring the current contract. So no grounds for complaint.

mrginge

JimmyTheWig wrote: »

Surely that would have been mis-sold, regardless of the KFI? Especially if the KFI didn't explicitly state that the draw-down facility _wasn't_ portable?

Since the terms are expressly stated in a written contract, you can't then argue outside the four corners of it based on a verbal conversation.
If you could then it would effectively render that contract worthless.

Equally, you can't argue that a facility does actually exists because the contract doesn't explicitly state that it doesn't.

kingstreet

Lenders have been withdrawing "re-draw" facilities for the last few years as it's unpalatable to the regulator that borrowing should be allowed to increase without evidence of affordability.

This has become the cornerstone of the MMR and we're likely to see more lenders follow suit. They cannot remove it fro the existing mortgage, but when moving a new mortgage is required and at that point such options are no longer available on the new mortgage.

I don't know if anyone has ever tested what is and isn't portable from the terms of a mortgage.

getmore4less

I happen to have the 01 T&C in front of me and these were in force for our loan taken out 04(base + 0.95% so are probaly the same as yours.

Flexible mortgage t&c(Ad275)
Section 24 makes it clear that offsetting is optional
Section 33 is very clear that they can take it away with 14 days notice

At the time portability is only mention in promotional material(still woolwich) but does say it has to be done on the existing terms

for us this was in the Woolich blue doc 9938802 01/04

Key facts then have no mention of portability or reserve


What would they do if you had maxed out your reserve(to pay the extra on the new house) then wanted to port.


THe key thing with the offset/reserve is that the drawdown overdraft is at the mortgage rate which is why they need to stay linked.

tlc678910

I perhaps misunderstand this product but could you draw down your reserve now while in your existing house and then arrange to port your mortgage to a new one?

getmore4less

A little how these worked.

With the reserve, once setup you could drawdown up to the limit.

The idea was you could have a pre agreed reserve limit and borrow more later.
They are basically a secured overdraft.

Handy for people that might want to do some work on a place.
on a regular loan the reserve was at SVR for offsets the mortgage rate.

The reserve was an automatic part of the offset arrangement even if you did not want/need one it would start a £0.

Now what happened is as you paid off capital the reserve would grow.

One of the benefits of the offset/reserve was that if you moved you could use offset funds and the reserve to raise the extra capital and port the existing mortgage and then start paying it down again.

Like the OP this was a feature that we considered important when taking out the deal.
Although portability has always been an at the time decision(with all lenders) not every one was aware of this and though it was a given.

One problem is that the way the reserve works you can borrow back to where you started but on a much shorter term, I think this was one of the unintended features of the deal.

IMO what probably should have happened is the limit of borrowing should have been capped at the level that would have been available on a normal repayment mortgage.

Barclays did have a go at restricting reserves a while back but offset borrowers got the option to keep theirs as is(that's what we did). For non offset borrowers the higher rate made it less attractive anyway.

Another handy thing with the reserve was you could effectively convert you mortgage in to a OD and hide all you saving in it so still qualify for benefits.

getmore4less

tlc678910 wrote: »

I perhaps misunderstand this product but could you draw down your reserve now while in your existing house and then arrange to port your mortgage to a new one?

This is a possibility but the T&C do allow them to mess the OP about.