Barclays / Woolwich Mortgage reserve

agarnett

Barclays reserves are simple - use it (all) or lose it. It doesn't matter if they have set a deadline by which time they will reduce it. Use it before then and they then have to like it or lump it. Yes they do loosely call it an overdraft on statements, and it is always linked to a separate bank account called a mandatory Mortgage Current Account that comes with all their mortgages whether you use it or not, which looks very much like any other current account on their systems when you see it on screens in branch, but the "mortgage reserve" is not an annually reviewable facility - it lasts as long as the main mortgage. They wouldn't dare start calling it in like an overdraft - they can't.

In the same loose way they call their Base Rate trackers Barclays Base Rate trackers not Bank of England Base Rate trackers, they wouldn't dare start setting their own base rate. They've caught enough flack and fines for manipulating LIBOR and FOREX without trying it on with their own base rate.

Adding to what boatman just wrote about his own reserve, some Barclays reserves have a better interest rate than others - offset mortgages tend to have reserves at the same interest rate as the main mortgage. Mine sits currently at 0.95% as a tracker. Others may have separate interest rates of say 5% which isn't quite so attractive.

As I say, if you want to keep it, use it, but do make sure you know what the interest rate is and have a plan for repaying it. You only have to succumb to fresh affordability checks and try to tempt them to continue if you want to try to keep it without using it.

NB If you do decide to use it, simply relying on arguing later that there was some technical breach of "treating customers fairly" by the Bank's past carelessness in allowing such facilities without proper affordability checks, or their failing to properly remind or notify interest rates may not be much of a repayment plan!

boatman

So how can I convince the Ombudsman that they need to investigate, up to now it would appear that they are sticking with the fact that Woolwich/Barclays can alter the reserve when they like according to the t&c's and there is nothing they can do. Seems hard to believe that the ombudsman are happy for such a big change in an agreement and the customer has no recourse, isn't that the reason there are unfair contract regulations?

agarnett

If you aren't going to use the old rule ("possession is nine tenths of the law") by starting to use your facility at that probably non-competitive 4.5%, then I don't think the Ombudsman will be interested in slaving over T&Cs with a view to enforcing your theoretical right to retain an unused facility that you may or may not start to use at some future date without further reference to Barclays. FOS won't have sufficient motive to go up against Barclays, who will argue they are carrying out reviews to FCA guidelines.

It is not a battle which FOS are likely to want to enter into.

Obviously, for a start, a mortgage reserve loan at 4.5% interest is less affordable than one at a cheaper rate.

It is for sure a weirdly designed product, but I don't think there is much to stop Barclays withdrawing the facility when you aren't using it. I suppose in that respect at least, it does have overdraft type undertones!

If you really are desperate to keep it as a particular emergency safeguard against some event you can envisage, then the best thing might be to start using it, and suffer the cost of the interest difference between 4.5% to borrow the reserve limit to the hilt, and what you can get by keeping it in some rainy day savings arrangement.

getmore4less

The reason that offsets have the reserve at the mortgage rate(all do this) is the reserve is part of the offset pool.

We drew down some reserve to put in an offset ISA account just to use the ISA allowance.

Thrugelmir

boatman wrote: »

isn't that the reason there are unfair contract regulations?

What's "unfair"? 4.5% isn't unreasonable. Forcing the lender to lend at a rate that would lose them money. Is outside the FOS's remit. As is interfering with commercial business.

boatman

Thrugelmir wrote: »

What's "unfair"? 4.5% isn't unreasonable. Forcing the lender to lend at a rate that would lose them money. Is outside the FOS's remit. As is interfering with commercial business.

But they have already agreed to the mortgage, and part of that product is being allowed to borrow back money I have already paid them, It is not additional borrowing, but at the SVR rate, I don't see how they will lose money?

getmore4less

The terms I have seen for any mortgage reserve were clear that any drawing on the reserve account would be at SVR.

Offsets were different as long as you kept the account in the offset pool.
(not checked if you can remove it from the pool)


Bringing the rate into a complaint mean you did not read or understand the implications of what you signed up to.

Stick to core case of being allowed to keep the reserve.

boatman

getmore4less wrote: »

The terms I have seen for any mortgage reserve were clear that any drawing on the reserve account would be at SVR.

Offsets were different as long as you kept the account in the offset pool.
(not checked if you can remove it from the pool)


Bringing the rate into a complaint mean you did not read or understand the implications of what you signed up to.

Stick to core case of being allowed to keep the reserve.

I'm happy with the rate, just not the reserve removal. It means they are removing an already agreed balance when the mortgage was taken out.

Do the bank call you up every year doing 'affordability' checks if you have an offset mortgage, is it reasonable?
Surely, provided you pay monthly, they can't keep calling, if they don't trust people, don't offer 30 year mortgages..

Davidtechman

interesting

IAmWales

Davidtechman wrote: »

I just made a post regarding this bank, may be different, but may be connected

It's different. Your problem is that you didn't realise you have an interest only mortgage.