Barclays / Woolwich Mortgage Reserve Mess

Thrugelmir

triplejs wrote: »

I believe that they are now fully aware of this glitch which is why all accounts were finally capped several years ago but have tried to cover it up in the hope that their customers simply repay the reserve account by the end of the mortgage term.

At the end of the mortgage term the entire balance will be repayable. Eventually the road runs out......

triplejs

We all know of the requirements to have all documentation precise and correct. If there is therefore a discrepancy between the what had originally been agreed and signed for, including all terms and conditions, then it would be extremely difficult to enforce the debt This has certainly been the case for many credit card companies having to drop court action over the years due to incorrect documentation.

getmore4less

I could check the terms during the application, from what I remember my reserve never had a separate limit set, I think there is mention of max borrowing(Across all accounts) against the mortgage charge of a set % of the valuation at the time.

As mine was an offset the interest rate on the reserve is the mortgage rate not the SVR(Woolwich/barclays equivalent)

I do have these on my first mortgage statement in 2004 so clearly documented, not a glitch

"The minimum amount to be paid to your mortgage before there is an increase in your Secured Overdraft is £1,000"

and

"One of the main features of your openplan offset mortgage is the ability to borrow additional money via your Mortgage Reserve(to a maximum of 90% combined mortgage and additional borrowing)....."

getmore4less

I got my mortgage folder out from the archive.

I got mine while it was Woolwich branded.

Sold as a
Woolwich Flexible Mortgage
(promotion leaflet item ref:9938800 Dec 2003)

pretty clear the intent is you can borrow upto 90% of the price/valuation through the reserve.

As part of the mortgage conditions there were also booklets.
Flexible Mortgage Facility Conditions(AD275 09/01)
The key definition in these T&C.

"Mortgage Reserve Account Reserve Limit"
means the amount initially notified to you in your mortgage offer.......or such other sum we notify you from time to time.......

Mine was initially £0 and every monthly statement had the limit on it which changed from time to time.

Mortgage conditions - daily interest E&W(sept 2001 edition) ( AD276 09/01)
These are the general mortgage condition.

I also have other promo leaflets that cover this facility.

The Woolwich guide to mortgage (9938802 01/04)
Page 8 covers the flexible mortgage with the reserve again with the 90% limit....

Interest rates and further information (9959312 3rd March 2003)

(part of the open plan set for offset)

Also covers the reserve the 90% and rate the same s the mortgage.

triplejs

Quite clear that you could possibly borrow up to 90% of the property value with this product but many customers were set a maximum limit on the reserve account which was much less than the 90% of the value of the property due to their initial income assessment. I was certainly not given anywhere near the 90% value on my reserve account despite the full value clearly being listed within the original offer. As Barclays still advise with their current products, if you want additional borrowing up to 85% of the value of your property, they will conduct an offordability check. Unfortunately, Barclays failed to conduct any of these checks when automatically increasing the reserve limit every few months above the original agreed maximum limit. My own experience clearly suggests that Barclays has problem with enforcing the repayment of the reserve account if it sits above the original agreed maximum limit. Now that is certainly different for customers who may have had their maximum reserve limit originally set at the full maximum of 90% with unrestricted increases due to a sufficient original income assessment. Again, customers should check their own original offer and agreement in order to establish exactly what they had agreed to and signed for.

minimike2

What you are talking about is auto balancing. The reserve limits only increased as the balance of the mortgage account was paid down, so the limit of the lending didn't go above the amount which had been sanctioned. Additional limit increases had to be applied for.

You appear to be holding onto some kind of misguided hope that you are not going to have to repay the money you have spent. You are going to find it much more difficult the longer you continue to ignore it.

fronty

Hello, I have about 33K outstanding on my reserve account, it accrues interest at the same amount as the main mortgage (mine is fixed at 0.75% above base). I used it to extend the house, I have about 8 years left on my mortgage term, I fully intend to have it paid off by then but Barclays write to me every year trying to reduce the amount I can borrow and every year I have to ring them up and tell them to leave it alone. So I have still have an additional 80K available to borrow "just in case". I want to have the facility there in case we have an emergency.

Anyone that thinks they can get away without repaying will get a rude awakening! When the mortgage term finishes they'll want all that cash back ASAP, so you need to find a way to repay it else you could lose your house! Is it really worth taking the risk if you've spent 25 years paying back the principal sum?

IMHO if your reserve account debt is bigger than your main mortgage debt then you may have been a little bit irresponsible and you seriously need to get help. Don't leave it to the last minute.

triplejs

People here are confusing the auto balance with originally being given the maximum 90% of the combined offer and reserve account. If your combined mortgage and reserve had originally been set at less than the full 90% then this was as a result of your income assessment at the time not being sufficient to access the full 90% value. It is therefore clear that regardless of how much you then paid off the mortgage, you still couldn't access any of the extra funds without having a fresh income assessment. If that wasn't required then Barclays would have simply given everybody the full 90% availability at the commencement of the mortgage and reserve account. Unfortunately, a glitch had increased all reserve accounts every time a £1 or 2 thousand had been paid off, contrary to the original agreed maximum limit. Again, customers should check or request a copy of their own individual original agreement as they are all different depending on your original income assessment. Some may have been given access to the full 90% value whilst others were not. If you weren't originally given access to the full 90%, then you shouldn't have been given automatic increases every few months as that clearly defeated the reason for the original lower limit. There is no doubt about it, this was a glitch for some customers.

getmore4less

Our initial mortgage drawn down was around 65% LTV

Our reserve started a zero and grew as the mortgage got paid down as per the T&C.

The outstanding balance + reserve OD limit got adjusted back to the initial drawdown when the capital payments hit the triggers.

AS expected...

capmon

I'm in a similar boat, I have a Barclays (formerly Woolwich) offset mortgage with the mortgage reserve facility. I'm getting these threatening letters about the borrowing - the threat is Barclays will report me to the credit reference agencies. I've never missed a mortgage payment, in fact, I have overpaid throughout the term of the mortgage. Both my partner and I have salaries significantly higher now than when we took the morgage out and the house is worth 2X what we paid for it.
It is giving me a lot of stress that Barclays may suddenly demand repayment of the offset - the potential negative impact to my 999 credit rating. Is this fear unfounded?

I've had the mortgage for 2/3 of the mortgage term and have used the offset to help with home improvements and invest in my ISAs.
I have borrowed something like 95% of my allowed reserve limit which was 90% of the original LTV.
Now, I have savings to cover the reserve in its entirety but I'd rather not liquidate my ISA until I have to as the returns here are in excess of the borrowing cost on the reserve. I have a monthly plan in place (for several years now) to pay off a decent chunk of the offset, which should reduce the borrowed amount by at least 6% a year. 

Basically I have a plan to repay the mortgage - should I just ignore the "threats"?