Barclays / Woolwich Mortgage reserve

getmore4less

ONLY offsets have the reserve rate the same as the mortgage rate.

All others the reserve rate has always been SVR.

7 years is a long time to not notice that you were not on an offset the annual statements would have made that fairly obvious.

Offsets get monthly statements(but you may not have known that).

boatman

DVDKEV wrote: »

Just posted this on an older thread, then found this one so adding here incase anyone can help;

I received the same letter last month. I rang to retain the reserve limit and whilst they agreed to do so, they stipulated that though my mortgage remains at BOE base rate plus 0.95%, any amount drawn from the reserve accrues interest at their variable rate of something like 4.75%. I am surprised at this and having read the posts here, it suggests that the reserve interest rate in other peoples cases mirrors the mortgage interest rate else it would seem daft to draw against the reserve to pay your monthly mortgage repayments.

I don't think you are alone in believing your reserve rate would be the same as the mortgage, for a while I thought the same, its how it was sold to me.

I have gone through the ombudsman to get my reserve reinstated but they keep throwing back my claim saying its ok for Barclays to change it to zero if they want.
To me the reserve was part of the original deal, the fact I haven't used it is irreverent, its like removing the death benefit from an insurance policy because you haven't used it.

Is there any way I can argue to convince the ombudsman to take up my case, at the moment, they keep sending responses to the effect that they won't take it further. To me its a fundamental part of the original product they offered, as such they should not be able to remove it, by all means trim it by 10% for example, but they should not be able to reduce it to virtually nothing. Its based on what I have already paid, the house price has risen well beyond the mortgage, so its not as if they will not get their money back.
Any thoughts?

AnotherJoe

I agree with you but i presume the ombudsman is going on the terms of the agreement which says they can vary the reserve amount allowed so small claims probably wont work either though theres a chance under unfair TS&Cs maybe?

kingstreet

Successive changes in regulation MMR (in April 2014) and EMCD (in March 2016) have left it virtually impossible for lenders to allow any kind of increased borrowing without evidence of income/affordability.

The arrangements we can see here (and Nationwide's borrow-back facility withdrawn to new accounts in March 2010) are the kinds of pre-crash options lenders would not be able to offer today unless they were forced by contractual obligation.

As a result they will do all they can to get rid of them.

boatman

Given that banks seem more than willing to offer pre approved loans for £20k, would it be reasonable given they already have a protected investment in the house, to offer to keep the reserve at a reasonable level rather than virtually zero. There must be a reasonable compromise rather than cut it and expect customers to accept terms where the bank can do as they like, they have been taking my money for over 10 years and yet I'm not to be trusted.

Are they going to do these 'affordabilty' checks every few months/years to catch people out, at what point do we have the right to pay our mortgage, and provided we do so, be left alone without fear of the bank taking away a mortgage because they feel like it?

kingstreet

Unsecured loans don't come under MMR or EMCD where in each case one of the 'Ms' represents the word 'mortgage.'

Affordability calculations and evidence of income are/will be required only where increased borrowing is being requested.

It's not a question of trusting the applicant. It's a question of demonstrating responsible lending practices and acting within the guidelines laid down by the regulator.

We're in a whole-new, post-crunch world and responsible lending is the order of the day.

getmore4less

Use of a reserve should nor be treated as an increase in borrowing it is a drawdown of pre approved lending.

it is similar to the withdrawal of overpayments because it is in effect an overpayment at day one where you got approved for more money than you needed.

difference it is implemented as an overdraft limit on the mortgage reserve account.

boatman

kingstreet wrote: »

Affordability calculations and evidence of income are/will be required only where increased borrowing is being requested.

Thanks for the input, sadly the bank don't seem to be on the same page, I have not asked to increase anything, just keep my current product, yet they ask for affordability checks, no idea of the criteria, but it seems many have failed which it would appear to suit the banks aims and force people to apply for credit which they are already approved for.
As getmore4less has said its the same as drawing down on an offset but the money is in a different account and the bank charge a higher rate of interest.

getmore4less

I have kept more of our reserve than we need, no checks.

Plenty of reminders it needs to be paid off at end of term.

The offset has brought the payments down to around £35 for the regular mortgage part the reserve works on interest only.

That is one issue with the way they implemented the reserve you could convert a repayment mortgage to an interest only overdraft quite quickly.

boatman

getmore4less wrote: »

I have kept more of our reserve than we need, no checks.

Plenty of reminders it needs to be paid off at end of term.

The offset has brought the payments down to around £35 for the regular mortgage part the reserve works on interest only.

That is one issue with the way they implemented the reserve you could convert a repayment mortgage to an interest only overdraft quite quickly.

Trouble is with the way the Woolwich product is set up, the reserve is charged at SVR(apx 4.5% at the moment) not my mortgage rate, so for them its a better deal than a normal offset.