Can they do this ? Mortgage interest hike

[PhilTheFragger]

We have a buy to let mortgage with the West Brom Mortgage Company. . It's a base rate tracker set at 0.99% over base

We have the original offer letter which clearly states that after an initial 2 year fixed rate, (now finished) it reverts to .99% over base for the life of the mortgage.

Have now had a letter to say they are hiking the margin over base to 2.99%
Can they do this,

 

[chrisd]

I seem to think that some banks have tried to pull this stunt on the grounds that they can't be profitable on the pre agreed margins and they have buried something deep within the conditions that allows this. The obvious way forward is to check that the letter isn't a mistake first, or a try on! Then I would say that you intend to make a complaint to the regulatory body. I have made complaints before on mortgage and insurance misdeeds and been reasonably successful. From memory you need to get a "final decision" letter from the lender before lodging a complain and their letter will tell which body to complain to.

Good luck!

 

[El Bandito]

By law? almost certainly yes. It will be in the small print somewhere.

By natural law. Clearly not - it is borderline false advertising. Good advice from Chris above. Write them a letter seeking clarification, and/or a change of heart. Also ask for the correct address for FOS - Financial Ombudsman Service.

I guess pragmatically - find yourself a decent deal elsewhere...

 

[AMcC]

We have a buy to let mortgage with the West Brom Mortgage Company. . It's a base rate tracker set at 0.99% over base

We have the original offer letter which clearly states that after an initial 2 year fixed rate, (now finished) it reverts to .99% over base for the life of the mortgage.

Have now had a letter to say they are hiking the margin over base to 2.99%
Can they do this,

We have a Woolwich mortgage for our own house base plus 0.27 for the lifetime of the mortgage.

Strangely, without us knowing my sister and her husband took the same mortgage and they have apparently heard that The Woolwich were offering people money to cancel the mortgage and go elsewhere as they had borrowed the money at 2.5% expecting the base rate to rise quite quickly, obviously it hasn't and is costing them a fortune.

Even at base plus 2.99% is that still quite a good rate for a buy to let mortgage ?

Morally I would think it is not a great move by the lender.

 

[mcbroon]

We have a buy to let mortgage with the West Brom Mortgage Company. . It's a base rate tracker set at 0.99% over base

We have the original offer letter which clearly states that after an initial 2 year fixed rate, (now finished) it reverts to .99% over base for the life of the mortgage.

Have now had a letter to say they are hiking the margin over base to 2.99%
Can they do this,

I think they probably can. The rules around mortgages are complex but I can't see anything explicit in them that prevents a lender from changing a rate mid-contract. The rules do stipulate a requirement to give you reasonable notice, in advance, of "any material change by the firm to the terms and conditions of the regulated mortgage contract where that change is permitted without the customer's prior consent".

I imagine there's probably a clause in the T&Cs under which they reserve the right to change the rates without notifying you first. Provided they've given you 'reasonable notice' in advance of the change, then they're probably within the rules.

However, the rules also talk about Communications being fair, clear and not misleading. You could base a complaint on that - that the offer document doesn't make it clear that the variable rate could change, so you’ve been misled. (If the offer document does say that the rate could change, then obviously you can't use that argument.) There's also a general requirement in the rules for firms to pay due regard to customers' circumstances and treat them fairly. You could argue that enticing you on a promised rate of 0.99% above base for the lifetime of the contract, on the expiry of the fixed rate, only to change that post-sale, is not treating you fairly. You could argue that you'd never have signed the contract if you'd thought the rate might change.

Might be worth calling FOS in the first instance to see if your complaint would have any legs. They have a consumer helpline on 0300 123 9 123 or 0800 023 4567. This isn’t the same as referring your complaint to them, this would just be a general chat with one of their advisers. They may be able to give you an indication of whether you’re likely to have any success with a complaint.

If you decide to pursue it, do so with the firm first. I’d put it in writing and make sure it’s clearly marked as a complaint. You shouldn’t have to do that but it’ll avoid any confusion if you do. You don't need to wait for a "final decision" letter. Under revised complaints rules, a firm's first response (not a holding letter, obviously) is its final response so, as soon as they reply rejecting your complaint, you can refer it to FOS immediately.

 

[PhilTheFragger]

This is what the offer letter says, pretty clear to me

Have written to the west Brom and await their response

Thanks guys

 

[mcbroon]

View attachment 7692

This is what the offer letter says, pretty clear to me

Have written to the west Brom and await their response

Thanks guys

Be interested to see what they say...

 

[Ethan]

We have a Woolwich mortgage for our own house base plus 0.27 for the lifetime of the mortgage.

Strangely, without us knowing my sister and her husband took the same mortgage and they have apparently heard that The Woolwich were offering people money to cancel the mortgage and go elsewhere as they had borrowed the money at 2.5% expecting the base rate to rise quite quickly, obviously it hasn't and is costing them a fortune.

Even at base plus 2.99% is that still quite a good rate for a buy to let mortgage ?

Morally I would think it is not a great move by the lender.

We have the same mortgage, at a slightly better rate, even, and have not heard about any buyout offer. Not that we would go for it anyway.

 

[duncan mackie]

We have a buy to let mortgage with the West Brom Mortgage Company. . It's a base rate tracker set at 0.99% over base

We have the original offer letter which clearly states that after an initial 2 year fixed rate, (now finished) it reverts to .99% over base for the life of the mortgage.

Have now had a letter to say they are hiking the margin over base to 2.99%
Can they do this,

http://www.telegraph.co.uk/finance/...borrowers-face-2pc-rate-hike-on-trackers.html

 

[Wolfman]

On different topic I think the whole buy to let situation is all wrong, we moved away from a new estate as many of the houses were being purchased as buy to let and rented to the USA base staff,the result was a broken community and neglected gardens and the people who did buy to live felt unhappy about the high % of "renters" paying up to £2000 per month rent

We couldn't wait to move away to a more normal estate where at least 90% owned and lived in their homes

All for buy to let but think it needs regulating better and rents should be controlled as they have become distorted and encouraged too many on the buy to let band wagon

 

[Kellfire]

All for buy to let

Said no first time buyer, ever.

 

[AMcC]

We have the same mortgage, at a slightly better rate, even, and have not heard about any buyout offer. Not that we would go for it anyway.

We hadn't heard of anyone being offered it but like you, too much of a good thing at the moment so we wouldn't take it either. I know there was a similar offer of base less 0.11 or 0.14 for the lifetime of the mortgage just before we remortgaged.

 

[Wolfman]

Said no first time buyer, ever.

Not sure I understand your comment ??

 

[SwingsitlikeHogan]

On different topic I think the whole buy to let situation is all wrong, we moved away from a new estate as many of the houses were being purchased as buy to let and rented to the USA base staff,the result was a broken community and neglected gardens and the people who did buy to live felt unhappy about the high % of "renters" paying up to £2000 per month rent

We couldn't wait to move away to a more normal estate where at least 90% owned and lived in their homes

All for buy to let but think it needs regulating better and rents should be controlled as they have become distorted and encouraged too many on the buy to let band wagon

I thought councils could cap the % of rental property in an area for precisely the reason you give - can destroy the immediate community. Maybe I was just imagining/hoping this was the case as I live on a road that has a fair amount of buy-to-let property - and most of that is for student. They are generally great and with who we have few if any problems - but you do notice the effect of b-t-l on your immediate community in a road.

Back on topic - I had a fixed rate mortgage with BoI and a couple of years back was made aware that interest rates were going to jump significantly and that would hit us at end of fixed rate period - basically they wanted rid of their residential mortgage portfolio - much of which they'd acquired when taking over Bristol & West BS. They waived our early repayment fees (quite a few ££££s and paid for independant mortgage advice - we just missed out on a £1000 'inticement to leave' they also did for a while.

About to go to my current lender to see if I can get out of my current fixed rate without incurring the penalties (or at least having them reduced) as even though only half way through the 5 yr fixed rate period - we are paying a relatively very high rate in todays mortage market. It seemed OK 3 yrs ago - but with interest rates stuck low and not looking to move much for a good bit it is costing us a LOT more than it could.

Financial stuff is a nightmare. Perhaps OK when salaries are rising a bit and costs are stable or falling and maybe the cost of the mortgage is not great for you in your overall scheme of outgoings - but my mortgage is my major outgoing by a long long way - way greater than the sum of all other monthly outgoings. So when salary like many is basically stuck and by god costs are not level - I just look at my power bill for starters - our mortgage is a killer

 

[Doon frae Troon]

Five years ago I paid up a 25 year mortgage at an average of around 6% interest.
My nest egg savings are now earning zilch interest yet our government pays out fortunes in housing benefit to folk who were foolish enough to buy houses in a vastly inflated market. Houses that buyers had no chance of affording but were relying on the crooked industry to inflate.

Two sides to every story.

 

[SwingsitlikeHogan]

My grand plan was to have mortgage paid off by time my 1st started uni. Unfortunately this plan assumed my endowments cleared the capital I owed at the end of 25yrs. But they were way, way short. As I want to have the morgage cleared before I retire I have had to put that shortfall to be paid back over a relatively short period - and as a result my monthly payments for that are horrendous - the sums make it that way. And now I have two at uni AND a horrendous mortgage AND limited salarly increases AND soaring household costs. Nightmare. And all I tried to do was the right thing financial - not realising (being missold) the risk associated with endowments.

 

[Wolfman]

My point is very true, house rental in the UK is crazy and overpriced compared to the rest of Europe where it is more normal to rent than buy and people have more disposable income which in term helps the economy

There is a real problem now in the UK
1.Rents are nearly twice what they should be
2. House prices / Mortgages are out of reach for many working people today
3. Buy to Let is bad and encouraged so as to indicate good house sales
4. Buy to Let communities are over growing destroying community feel

Generations before us encouraged us to buy to live, this now is hard to achieve f not impossible for the young

If there are supposed to be restrictions on buy to let it isn't working and we lived that experience and found out the hard way

 

[SwingsitlikeHogan]

My point is very true, house rental in the UK is crazy and overpriced compared to the rest of Europe where it is more normal to rent than buy and people have more disposable income which in term helps the economy

There is a real problem now in the UK
1.Rents are nearly twice what they should be
2. House prices / Mortgages are out of reach for many working people today
3. Buy to Let is bad and encouraged so as to indicate good house sales
4. Buy to Let communities are over growing destroying community feel

Generations before us encouraged us to buy to live, this now is hard to achieve f not impossible for the young

If there are supposed to be restrictions on buy to let it isn't working and we lived that experience and found out the hard way

Isn't the problem with rental costs not coming down partly that lenders have based their loans to B-t-Ls on the basis of an assumed monthly rental income. Reduce rents and the L-t-Bs can't afford the repayments...

Not being a B-t-L I don't know if there is anything in a B-t-L loan agreement that specifies the minium rent that the 'owner' has to charge for the property - that would also tie the hands of the 'owner'.

 

[Wolfman]

The buy to let mortgage will influence how much rent to charge, and as there is a house shortage the rent market prices are driven upwards to crazy amounts. The result is Buy to let is a lucrative business hence why its out of control and people are making good money from it

Havnt got an issue with buy to let but it should be restricted more in my opinion as its out of control

 

[SwingsitlikeHogan]

The buy to let mortgage will influence how much rent to charge, and as there is a house shortage the rent market prices are driven upwards to crazy amounts. The result is Buy to let is a lucrative business hence why its out of control and people are making good money from it

Havnt got an issue with buy to let but it should be restricted more in my opinion as its out of control

#

So the lack of affordable housing to buy means that B-t-L owners can charge a 'premium' rental; and that rental drives the market rental; and the market rental determines the loan someone can take for a B-t-L purchase; and that loan determines the rental the borrower has to charge...BOOM!

But let's say in Germany - same number of properties for people to live in and same number of property B-t-Ls. But as more rental property available to buy, each B-t-L can own more properties but can make the same profit across all his portfolio of property even though charging lower rental - because he makes a smaller profit but on more properties. Simple really.