Leeter from my lender this am.

dekh

My mortgage is with the Woolwich, well, Barclays now I guess.

When I last switched, the mortgage was set up with a reserve overdraft thing. Basically the equity in the house at time of remortgage, rising with the amount paid off. Good idea as the equity can be released by me simply be writing a check, no survey, no fees, no nothing, all set up at time of remortgage.

Seems the bank no longer thinks this is a good idea and I have to fill in a form and send it back to them stating whether I want to keep the facility, and it seems that it gets fixed with the current amount, reduce it to £100 (to what purpose I don't know), or remove it.

If I tell them I want to keep it as is, do you think I'm giving them licence to stop increasing it in line with the amount I'm paying off?

If I do nothing they remove the facility.

Are both of these unfair alterations to the T&C of the mortgage?

setmefree2

Hi

We received one of these letters at the back end of last week too. I posted threads on this board, the loans board and the MFW board. I am setmefree2. Everybody said to send the letter back and say you wanted to keep the reserve, which is what I did as they even send you a stamp paid envelope. I have no intention of using this money at the mo but you never know. But someone did point out that this money is at a SVR, so I would probably never use it anyway. Do you think it is Barclays changing the T & Cs of a Woolwich product or the credit crunch?

All The Best

SMF2

minimike2

Its in the Ts&Cs that they can change it at any time so no, its not unfair. I guess they are doing it to try and stop people spending on it and then finding they cannot pay it back. They are trying to act responsibliy by removing a channel by which people can rack up secured debt and by giving the client the option to keep or remove it, if the client later uses it and then cannot repay they will not be in a position to accuse Barclays of giving them something they didnt want or couldnt pay back, as they will have given the client the option to have the facility removed.

chappers

It is probably more to do with the voluntary code of practice that has just come in rather than the contraction in the credit market.

mpsavuk

chappers wrote: »

It is probably more to do with the voluntary code of practice that has just come in rather than the contraction in the credit market.

I'm not so sure. This type of set up sounds like the equivalent of an American HELOC (Home equity line of credit) and believe me when i say they are being pulled left, right & centre in the states.

silvercar

Sounds like a OneAccount type offset mortgage. I don't see why the lender should arbitrarily change it.

dekh

Thanks for the answers.

Sorry I missed your posts setmefree2 bad forum form :cool:

Sent the letter back keeping my line of credit open. Though I didn't realise it was at Barclays SVR, I thought the reserve was at the same rate as the mortgage so I'm very glad I asked.

Silvercar - It is an offset mortgage, (yes I know they are frowned upon in some quarters but it's working for me at the mo.). I moved to it from an reasonable lengthy fixed rate with Newcastle Buidling society - my MA at the time didn't tell me there was an extended tie in which is why I sometimes have a downer on them. And we are a few years into this mortgage that's why this came out of the blue.

minimike2

If it is an offset with a reserve then the rate charged is the same as that on the main mortgage, but payments will be made interest only unless the account holder increases them to cover capital also.

The SVR is charged on any Woolwich NON-offset reserve accounts.

dekh

Many thanks for that. That was my understanding at the time. Hopefully I'll not need to use it.

Bismarck

Today is yet another day I'm glad I found this forum....had I got this letter by myself I'd have done the same as I've done but not so calmly.

I'd already read about other people getting this letter so was expecting it and ready to act if it didn't arrive.

What I don't like is the fact it was sent by ordinary mail with a default option of "if you don't sign and return, we'll go ahead and cap your limit at £100."

What happens if you didn't expect the letter to come and it didn't arrive? Nice surprise huh, if the reserve was your emergency last resort fund or you'd planned to pay for your home repairs and it's suddenly gone...they could have at least put it as recorded delivery or set the default that the limit stays unless they hear from you.

I also don't get the mentality....they want you to give it up so they can give the limit somewhere else (more profitable) - yet they let you keep it at no cost....can they withdraw it full stop if they want, anyway whether I want them to or not?

Also, does the letter mean that my limit is now fixed and won't rise any more? In a way it's good as I'll not get any hassle about a new bathroom for a bit! On the other hand it was good to see the limit rise as I paid more off the mortgage.

All in all, a bit odd! But glad I'm not the only one to get the letter....

Just need to make sure they acknowledge receipt of my return letter.....

Morley's_mum

Three months ago we tried to get Barclays/Woolwich to remove this facility from our account - we never requested it, never wanted it, and didn't know we had it until it appeared on our internet banking and we received cheque books etc. £50,000+ of (unwanted) credit just sitting there begging to be used!

They categorically refused to remove it or reduce it, despite us asking nicely!

Today we get the same letter as everyone else saying that as we have not used the facility "recently" (never, in fact), they are going to reduce it to £100!

I feel a Victor Meldrew moment coming on ......................