Bl**dy banks

[Deendog]

afternoon all

hoping for some advice in relation to a mortgage.

Approx 12 years ago I took a mortgage with a high street bank. I planned to port the mortgage in the future so looked into the provisions carefully. The position was that I had 3 months from redeeming the existing mortgage to take a new mortgage with the existing facility (which was at a very favourable rate)

Last week I redeemed the mortgage. A few days before hand I called to check whether there was anything I needed to do in order to trigger the 3 month period for porting the mortgage.

After being passed around for an hour or so I was told that the bank had changed the rules on porting and that now the new mortgage had to be put in place at the same time as redemption of existing mortgage.

Apparently they changed the rules 4 years ago

Is it really the case that banks can unilaterally vary a substantive provision mid way through the term purely for their own commercial benefit??

I understand the need to be able to modernise / update / comply with new legislation etc. but this change was just because they wanted out of the mortgage market.

Doesn't seem very fair. Any point in challenging?

many thanks

[Sarnie]

What do you mean by this;

"but this change was just because they wanted out of the mortgage market"

Are they no longer lending to new business?

[Deendog]

yes, not doing any new mortgage business
when I say high street bank it was actually a subsidiary of a high street bank that was dressed up to look like a posh private bank. they have now dropped the mortgage element of their business and are concentrating on wealth management

[Terminator X]

What do your T's and C's say? Needs consent of both parties to make a change afaik.

TX.

[Sarnie]

Deendog said:

yes, not doing any new mortgage business
when I say high street bank it was actually a subsidiary of a high street bank that was dressed up to look like a posh private bank. they have now dropped the mortgage element of their business and are concentrating on wealth management

Ok, when you port a mortgage......most people think of it as simply taking the same mortgage with them to a new property............but it isn't.

The old mortgage is redeemed and a new mortgage is taken but on the same rates as the old mortgage. If the lender has stopped providing mortgages then the porting of a current mortgage is actually them providing a new mortgage (just on the same rates as the old one) hence they won't do it.

Also, when you port a mortgage, as it's essentially a new mortgage application to them (just to a current customer and honouring the old rates) then you also need to satisfy the current lending criteria which is what catches a lot of people out post MMR and MCD as their circumstances no longer fit criteria.

It's not a given that if you have a mortgage, that the lender will automatically agree to it being ported to a new property....

[Deendog]

Thanks sarnie

I appreciate that it is a new loan (and legal charge)

My query is how they can unilaterally change the basis on which they contractually agreed to honour the previous rate.

They are not saying that I no longer qualify for the loan, simply that they have decided they don't want to honour the rate on the terms and conditions that they previously agreed to.

As TX says, a variation to a contract would normally require consent of both parties yet banks seem to be in a position where they can (or purport to be able to) vary terms unilaterally.

In this case the bank and I agreed that, provided I continue to meet lending criteria etc, then for a period of 3 months following redemption of the first loan they will extend a new loan secured on a new property but at the interest rate and other terms that applied to the previous loan.

[Sarnie]

Deendog said:

Thanks sarnie

I appreciate that it is a new loan (and legal charge)

My query is how they can unilaterally change the basis on which they contractually agreed to honour the previous rate.

They are not saying that I no longer qualify for the loan, simply that they have decided they don't want to honour the rate on the terms and conditions that they previously agreed to.

As TX says, a variation to a contract would normally require consent of both parties yet banks seem to be in a position where they can (or purport to be able to) vary terms unilaterally.

In this case the bank and I agreed that, provided I continue to meet lending criteria etc, then for a period of 3 months following redemption of the first loan they will extend a new loan secured on a new property but at the interest rate and other terms that applied to the previous loan.

But you can't still meet "lending" criteria, if they are no longer "lending".......

There is no obligation upon a lender for them to port your mortgage, only consider it at the time of request, which in your case comes at a time where the lender has withdrawn from the market.

I've taken this from an illustration I've produced today from natwest;

"If you buy a new property while an early repayment charge (ERC) is payable on one or more of the
products which make up this mortgage, you may port your existing mortgage product(s) to your new
property subject to the following terms; Your new application must meet our lending criteria current
at the time you move. We will carry out credit checks on you, and will require a valuation of the new
property, and will decline to port if you do not meet our criteria in force at that time. This may mean
that we decline to lend at all on the new property, or may allow you to port less than the amount you
have applied for. You may not port to a flexible mortgage type such as Offset or One Account
mortgages. The customer named in the existing mortgage and the ported mortgage must be the
same (this means that in the case of a joint mortgage all of you must also be named on the new
mortgage and you cannot port separately), and the mortgage product must be the same, in terms of
interest rate and product end date. The mortgage must be ported to a new property that you are
purchasing; you cannot port to property you already own. We will refund your ERC if you meet the
above terms, provided that you complete your new mortgage within 3 months of the date of
redemption of the current mortgage. (e.g. if this mortgage redeems on 25th January, you new
mortgage must complete by or on 24th April. If 24th April falls on a non-business day, the new
mortgage must complete by or on the last business day before that date). If you port the full balance
on which an ERC is payable, we will make a full refund of the ERC. If you port less than the full
balance outstanding we will refund only the ERC payable on the amount transferred. Where no
ERC is payable, you may apply to us for a new mortgage when moving house. Any new application
will be subject to our lending criteria current at the time you move, and will require credit checks and
a valuation of the new property."

[Deendog]

That's very helpful thanks.
Have to say that argument is a little circular, - we agree to do x provided you meet certain critiiria at the relevant time. One of the criteria being the bank wanting to do x at the relevant time!

In this instance they are not saying that they are able to decline my request by virtue of the original t&c - they acknowledge that I could have ported the mortgage if the rules had not been changed by them 4 years ago.

[Sarnie]

Deendog said:

That's very helpful thanks.
Have to say that argument is a little circular, - we agree to do x provided you meet certain critiiria at the relevant time. One of the criteria being the bank wanting to do x at the relevant time!

In this instance they are not saying that they are able to decline my request by virtue of the original t&c - they acknowledge that I could have ported the mortgage if the rules had not been changed by them 4 years ago.

Thats the point, porting is possible, subject to the rules at the time of requesting it.

Four years ago they would have done it.

Four years later they've changed their lending position.

I understand that it's frusting, you could raise a complaint, but in my opinion it's not worth the aggravation....there'll be lots of "holding letters"....."We acknoweldge your complaint"...."We are reviewing it thoroughly"........only to come back with the same outcome that you have already been told....

[anonymous-user]

"IF" only I could guess the lender,
Our mortgage provider did that a few years ago as they have been badly burnt offering a low % above tracker.

Stopped all porting, then when taken to court 'reinstated' it, funnily enough when we tried to port we never met the 'lending criteria' even though the LTV was lower and we were borrowing a 3rd less.
You can safely say i'm stuck in my house now unless I move to another much less attractive product that costs more unless I downsize and pay cash.