Barclays / Woolwich Mortgage Current Account Reserve - Limits Called In Early?

agarnett

Anyone heard anything lately?

Thrugelmir

Why do you ask? Is more to the point.

kingstreet

I've heard of such limits being removed when people move house, as lenders no longer wish to provide unfettered borrowing ability without checking affordability.

However, if you are being asked to repay or reduce something, the lender is uncomfortable to its exposure with you.

agarnett

I ask because I have heard talk of it linked with a requirement for certain lenders to tighten up lending mistakes of the past.

Almost all mainstream Barclays Current Accounts ended up with something called "Personal Reserve" which was /still is a kind of poorly controlled reviewable anytime silly very expensive overdraft beyond a sensible overdraft that no responsible customer would ever use unless they were in dire straits and willing to get in deeper just to put off the evil day.

Well with another example of misleading industry jargon vocabulary, I think all Barclays / Woolwich mortgages come with a Mortgage Current Account which more often than not has another type of "Reserve" associated with it. This one does indeed appear to some like it is an overdraft, but in fact is just a debateably very poorly understood extension of the original loan limit (possibly at an increased interest rate, possibly not) which is repayable at the end of the mortgage term along with the original mortgage (not on demand like an overdraft).

It isn't really reviewable (call-in-able) at all but I have heard that perhaps these "reserve" arrangements have clearly over-extended many customers long term - they may never be able to pay them back.

So I have heard that the bank may try to "review" (change the terms and limits of) mortgages already sold, anyway!

There is news from BBC today that banks are being urged again to increase their capital before any further economic downturn. I understand that news of this type, and naming specific banks, may not be slow in hitting headlines in the coming months.

So has no-one in these forums heard any such similar thing?

Thrugelmir

agarnett wrote: »

I ask because I have heard talk of it linked with a requirement for certain lenders to tighten up lending mistakes of the past.

Financial circumstances can change overnight. What was ok some years back might not be ok now.

getmore4less

Personal reserve on accounts went months ago.

getmore4less

Mortgage current account reserves were reviewed some time ago and many were reduced.

The rates are SVR or mortgage rate if offset.

The problem is the reserves do not reflect the reducing term and are not linked to the calculation of the mortgage payment so quite easy to get yourself overextended if you don't understand how they work.

katejo

I have never actually used my reserve though I do have one. In the past week I have been in touch with Barclays concerning accessing my mortgage balance online. While doing this I did read somewhere that they were no longer offering the reserve with new mortgages but that some mortgagees still had this option. Perhaps it won't be available if you remortgage.

agarnett

Thrugelmir wrote: »

Financial circumstances can change overnight. What was ok some years back might not be ok now.

Well what I heard is that your relationship with your mortgage lender might change overnight. They might unilaterally call-in a significant part of your loan agreement when you least expect it.

Some lenders who might have been ok to stick with some years back might not be ok now unless you know your rights.

A bank in nanny state clothing is not a pretty sight.

Oh, and getmoreforless, you say personal reserve (that's the thingummy on current accounts - not mortgage accounts) went months ago ? Interesting. Went where? So I wonder how they work for those that have them ? Answers on a postcard, but meantime maybe this geezer down the pub can help out :rotfl:

Thrugelmir

agarnett wrote: »

Well what I heard is that your relationship with your mortgage lender might change overnight. They might unilaterally call-in a significant part of your loan agreement when you least expect it.

Some lenders who might have been ok to stick with some years back might not be ok now unless you know your rights.

A bank in nanny state clothing is not a pretty sight.

Oh, and getmoreforless, you say personal reserve went months ago ? Interesting. Went where? So I wonder how they work for those that have them ? Answers on a postcard, but meantime maybe this geezer down the pub can help out :rotfl:

Unsure what your point is. To pass any further comment is mere speculation on my part. Simply too many variables, and if and buts.

agarnett

Well perhaps I am being dense ?

Let's cut down the variables a bit to make it simpler for you to see the point:

• A mortgage is a long term loan
• usually from a high street name bank
• usually to provide a way over decades to buy a home

It requires planning in advance else the customer might not fit the arrangement and it will too easily go off the rails into default. Mortgages are long term agreements with a start date and an end date, and as long as both parties keep to the agreement (which from the customer's viewpoint is essentially not getting into arrears with payments) then most of them work.

Mortgage loans are not rocket science, although rocket scientists have long preferred them to rockets as a way of making a killing once they have learned the maths of choice.

Over the years, mortgage contracts have been sold as 'more flexible' by the addition of features or contractual devices which were designed to appeal to our lifestyles and prolong the lenders' business with us e.g.

• portable (when we move)
• extendable (when we wish to borrow more against increased equity)
• one off lump sum part redeemable (if we are feeling flush)
• suspendable (when we need a payment holiday following certain life events)
• endowment or pension backed (in the old days)
• interest only (jolly wheeze)

I believe the Barclays/Woolwich Mortgage Current Account Reserve was one such device or feature that dabbled with the extendable / part redeemable concept. Some customers actually understood what they bought and used the features or at least planned to over the life of their mortgage contract. They actually signed before the start date to say so!

They are however long term contracts. Now it seems (and getmoreforless seems to confirm it) that part of the contract has been withdrawn for some existing customers.

You can dress it up as 'responsible lending' if you like, but retrospective 'responsible lending' of this type looks suspiciously like the lender breaking the contract to reduce their exposure.