Woolwich/ Barclays Reserve Facility

borntobefree

Hi

Just interested in your views on the following:-

I have a Woolwich old open plan mortgage. The Woolwich was taken over by Barclays. Our mortgage has a £48k reserve facility on it. This morning received a letter from Woolwich/ Barclays saying that if we don't tell them that we want to keep the facility, that we will lose it and that in the future a fee will apply to get it back (current fee £150 - and that then borrowing is subject to status).

Thing is I think I should hang on to this facility even though I see no need for it at present.

Any thoughts

Thx

B2bF

dimbo61

tell them you want to keep the reserve facility IF it does not cost you any
money to do so.
if you read the terms and conditions of your mortgage deal with woolwich
then barclays can not change them without your agreement.
wether you should use the reserve facility is a completely different matter.
1 do you need the money for improvements to your home
2 what is the interest rate ( same as mortgage ???)
3 can you borrow the money cheaper else where
4 most important can you afford to pay it back
this thread is called MF for a reason as most of us want to get rid of our
biggest debt the MORTGAGE and be debt free.
If the interest rate is cheaper than you would get from the banks then
hang on to the facility GOOD LUCK

TurnaroundSue

We have this facility also, however, ours was taken out with Barclays and NOT the Woolwich, so I assume our T&Cs would be different to yours. However, from what I understood it meant was that as your mortgage reduces your reserve limit increases to that of the amount your borrowed. I know that at present our mortgage rate is 5.65% fixed for 10 years (our mortgage is due to finish in 6), however, I wanted to borrow from the reserve account the rate would be higher than the fixed mortgage rate - at this time last year it was about 1% higher.

I would agree with Dimbo to look around if you want to use this as it might that you can get a better deal elsewhere. I haven't received a letter yet asking if the facility is still required, but most probably will do so in the near future.

Hope this helps - good luck

borntobefree

Hi

Many thanks for your replies.

We don't need the money and the reserve probably is due to us paying down our mortgage, come to think of it. I just wondered what people thought with regards to the credit crunch...can't be a coincidence can it? Just wondered if we would be daft to say no to a reserve facility in the current climate

So_Sad_Angel

Hi BTBF

Re Credit Crunch. - When Banks liquidity gets tight they `pull back` on unused facilities...this way they don`t have to `earmark ` funds in case you need it. Thus they have more available funds so liquidity is improved.

Note that as this is a reserve to your main mortgage ...if you want better rate you may have to remortgage elsewhere & this may be costly in the longer term.

If you think you may need the facility then tell the bank you want to keep it & this will just `sit there` until u need it.

Cheers Angel

setmefree2

Hi

I'm bumping this to the 1st page again. I know from other boards that others have received this letter today and yesterday and that other MFWs have this account. There are posts on this on the mortgages and endowment board....

Crunch?

Surfbabe

I haven;t had my letter yet but we have used at maximum £39K of our Reserve. Its now down to £32K thank goodness. If its not going to cost anything to keep the facility then keep it.

alijolly

I haven't had my letter but interestingly my latest £10000 overpayment hasn't been added to my reserve as it usually is. As we should be paying mortgage off later this month it isn't a big issue any more but I always thought this was the big selling point of this mortgage. Certainly in the past we have used ours and it was a useful safety net.
I still like to look at it just because it shows me how much we have paid off our mortgage everytime I looked at my current account.:j

borntobefree

alijolly wrote: »

I haven't had my letter but interestingly my latest £10000 overpayment hasn't been added to my reserve as it usually is.:j

Yes, someone on the the mortgage board said that this letter has effectively changed our terms and conditions as:-

option1) Keep the reserve at the figure it is now (meaning it no longer rises - a change in T &Cs)

option2) Don't do anything and you lose the reserve and have to pay to get it back - also a change in T & Cs

So it was a lose - lose scenario, looking like a win (option1) lose (option 2). Whatever we replied we were worse off:eek:

If you never got your letter through the post the default was to lose the reserve.

Banks. Don't you just hate them:o

TallGirl

I have an offset mortgage we took it out via Barclays and it was Woolwich. Our reserve is quite large over £80k so I am not worried about it not increasing but it is a cheap way to borrow short term and I shall need it for our new bathrooms. Will make sure I open every letter from Barclays have a habit of throwing them out if it looks like insurance or loan offers.

catshark88

alijolly wrote: »

I haven't had my letter but interestingly my latest £10000 overpayment hasn't been added to my reserve as it usually is. As we should be paying mortgage off later this month it isn't a big issue any more but I always thought this was the big selling point of this mortgage. Certainly in the past we have used ours and it was a useful safety net.
I still like to look at it just because it shows me how much we have paid off our mortgage everytime I looked at my current account.:j

Exactly the same with us....