Below base rate trackers paying you!

[softtop]

When my C+G below base rate tracker meets an interest rate of 0.0% do I get paid for having a mortgage with them?

[Jespin]

Somehow I doubt it, they're more likely to impose a collar in the near future as they will always need to charge you something in order to be able to attract savers with half decent interest rates.

[Goochie]

There will be small print stating the absolute minimum (I guess it will be 0.5% or similar)

[scotal]

One of the lenders has said that rather than physically paying you they will reduce your outstanding mortgage balance by the same amount. C&G have also said they will pass on all rate cuts to 0. From that I would say that you woudl go to negative interest, but your best bet is to call them.

[beccismith]

I have spoken to a friend of mine at a large bank and he says that mortgages can be called in at any time by the lender and if the lender faces the possibility of having to 'pay' the customer if rates fall below 0% then they will simply call in the loan!

[Goochie]

http://news.bbc.co.uk/1/hi/business/7819647.stm

[softtop]

thanks for the comments, I will wait and see what happens, getting information out of them is difficult at the best of times!

[Smirnoff]

There was an official comment in the Times yesterday saying they would charge no interest but take capital repayments!

[JustinP1]

beccismith said:

I have spoken to a friend of mine at a large bank and he says that mortgages can be called in at any time by the lender and if the lender faces the possibility of having to 'pay' the customer if rates fall below 0% then they will simply call in the loan!

I would suggest then that your friend at the 'large bank' reads the Consumer Credit Act, as that (with respect) is a load of rubbish.

You can't just 'call in a loan' when you feel like it. That is the whole point in having a contract. Thats just silly. Even in practical terms, where are people going to get mortgage sized amounts from if they could be 'called in'?


The only times then can do this is on overdrafts where the right to recall the facility is part of the contract.

[scotal]

JustinP1 said:

beccismith said:

I have spoken to a friend of mine at a large bank and he says that mortgages can be called in at any time by the lender and if the lender faces the possibility of having to 'pay' the customer if rates fall below 0% then they will simply call in the loan!

I would suggest then that your friend at the 'large bank' reads the Consumer Credit Act, as that (with respect) is a load of rubbish.

You can't just 'call in a loan' when you feel like it. That is the whole point in having a contract. Thats just silly. Even in practical terms, where are people going to get mortgage sized amounts from if they could be 'called in'?


The only times then can do this is on overdrafts where the right to recall the facility is part of the contract.

Not so.

{quote=times article]The Council of Mortgage Lenders said that the clause allowing lenders to demand that a mortgage be repaid at short notice existed in the small print of almost every mortgage in Britain, although it was meant to cover only exceptional circumstances. This month a judge supported the right of lenders to repossess properties at will under a law dating back to 1925.

Taken from the times article on a mortgage that has been "called" by RBS. (although there seem to be mitigating circumstances in that case, the borrower hadn't missed any payments, so unless the bank became aware fo fraud they had no reason to call the mortgage.
Any bank pulling a mortgage without due cause though is going to have a ststorm form the FOS.

[JustinP1]

scotal said:

JustinP1 said:

beccismith said:

I have spoken to a friend of mine at a large bank and he says that mortgages can be called in at any time by the lender and if the lender faces the possibility of having to 'pay' the customer if rates fall below 0% then they will simply call in the loan!

I would suggest then that your friend at the 'large bank' reads the Consumer Credit Act, as that (with respect) is a load of rubbish.

You can't just 'call in a loan' when you feel like it. That is the whole point in having a contract. Thats just silly. Even in practical terms, where are people going to get mortgage sized amounts from if they could be 'called in'?


The only times then can do this is on overdrafts where the right to recall the facility is part of the contract.

Not so.

The Council of Mortgage Lenders said that the clause allowing lenders to demand that a mortgage be repaid at short notice existed in the small print of almost every mortgage in Britain, although it was meant to cover only exceptional circumstances. This month a judge supported the right of lenders to repossess properties at will under a law dating back to 1925.

Taken from the times article on a mortgage that has been "called" by RBS. (although there seem to be mitigating circumstances in that case, the borrower hadn't missed any payments, so unless the bank became aware fo fraud they had no reason to call the mortgage.
Any bank pulling a mortgage without due cause though is going to have a ststorm form the FOS.

I have just checked the relevance of the 1925 act and that is to do with gaining repossession without a court order. However, more commentary about that seems to only relate to situations of default.

In that news report the journalist seems to have linked that to a case where someone had a mortgage with Natwest as that was the law they used to repossess the house without a court order.

It is indeed the case that if there is clause is in your contract for early repayment you are bound by it - to an extent. I just checked my mortgage and did find a three month 'notice period' for repayment and this was something I didn't realise, so I stand corrected as I said this applied to overdrafts!

However, any clause is subject to unfair terms regulations. In most situations a right of the mortgager to call in a loan on rates they set themselves just because it is not longer as viable as it was is hugely one-sided, and I would have thought, unfair. Such as in the case that some people's mortgages which are 'collared' the current legal thinking is that unless this was brought and made clear in the 'key facts' section of the contract this may be not to be able to be applied.

In thins case, as you have said I cannot see why that they would pull a mortgage - this seems to be an isolated case. If it was a policy we surely would have seen more repossessions and forced remortgages like this under this clause. I can only think that there is some more information that we are unaware of, maybe a fraud or such like when the mortgage was applied for.

In the wider sense, I cannot see the Ombudsman and failing that the government allowing systematic repossessions apart from extreme circumstances or fraud.

Edited by JustinP1 on Monday 12th January 18:54

Edited by JustinP1 on Monday 12th January 18:56

[JustinP1]

I have just done some more research about that particular case.

Apparently the homeowner took out a £225k mortgage on a £250k house with Natwest 4 years ago.

Since then they got a secured loan for £100k against the property with another lender. They didn't inform NatWest.

NatWest discover this recently as they came back to NatWest for a remortgage. The remortgage was turned down and the clause to call in the mortgage was called in I guess due to the serious breach in getting the huge second mortgage without permission.


As I thought, a bit of 'journalistic licence' has taken place and they did not explain that bit and the journalist instead kept stressing the point that they have never missed a payment in order to make a story from it. Of course, since, this same story has been syndicated all over the net.

[birdcage]

They won't call in the loan...Too much backlash, unless the mortgage holder is in some way being a tool.

I am on 1.47% with C&G and long may it continue.....

[JustinP1]

birdcage said:

They won't call in the loan...Too much backlash, unless the mortgage holder is in some way being a tool.

I am on 1.47% with C&G and long may it continue.....

Indeed.

The moral of the story is don't get a six figure secured loan which puts you in negative equity without informing your mortgage lender...

Or, if you really, really must don't go back to them and make them check your file and ask for a remortgage!

[scotal]

JustinP1 said:

In the wider sense, I cannot see the Ombudsman and failing that the government allowing systematic repossessions apart from extreme circumstances or fraud.

I don't disagree with you, and I agree that the story is hopelessly canted to make the bank look bad, but the clause is still there. (Seeing at NW refused to comment we haven't yet seen their side of the story, but I suspect it has something to do with mortgage fraud.)
I also agree with you that the "mate at the big bank" above is wrong in his assumption that lenders will/can simply call mortgages. However the worst recent offender in getting people off their mortgage book has been Northern Rock, who of course are state owned.
As far as key facts go, if the lenders have to send out their t&c's with every KFI, let alone with the offer, things are going to get worse way way before they get better.

[JustinP1]

scotal said:

JustinP1 said:

In the wider sense, I cannot see the Ombudsman and failing that the government allowing systematic repossessions apart from extreme circumstances or fraud.

I don't disagree with you, and I agree that the story is hopelessly canted to make the bank look bad, but the clause is still there. (Seeing at NW refused to comment we haven't yet seen their side of the story, but I suspect it has something to do with mortgage fraud.)
I also agree with you that the "mate at the big bank" above is wrong in his assumption that lenders will/can simply call mortgages. However the worst recent offender in getting people off their mortgage book has been Northern Rock, who of course are state owned.
As far as key facts go, if the lenders have to send out their t&c's with every KFI, let alone with the offer, things are going to get worse way way before they get better.

I agree. As I mentioned in my post above, the situation was a 'one-off' and pretty extreme circumstances totally at the fault of the homeowner. I have a reasonable dislike of banks, but I can actually see their point of view on this one!

I think to get repossessed in this way you would have to do something as extreme as that, or knock half your house down to make it worthwhile that they repossess.

After all, even if you are on a cheap rate, the banks know that in two, five and ten years time the rates will be higher and they will still rake the money in so much you will still end up paying for your house twice over 25 years.

Edited by JustinP1 on Monday 12th January 20:02

[beccismith]

JustinP1 said:

beccismith said:

I have spoken to a friend of mine at a large bank and he says that mortgages can be called in at any time by the lender and if the lender faces the possibility of having to 'pay' the customer if rates fall below 0% then they will simply call in the loan!

I would suggest then that your friend at the 'large bank' reads the Consumer Credit Act, as that (with respect) is a load of rubbish.

You can't just 'call in a loan' when you feel like it. That is the whole point in having a contract. Thats just silly. Even in practical terms, where are people going to get mortgage sized amounts from if they could be 'called in'?


The only times then can do this is on overdrafts where the right to recall the facility is part of the contract.

Thanks for the posts guys!

But Im a bit confused now - is my friend wrong then JustinP1 with regard to the Consumer Credit Act?

The way I understand it is that the mortgage companies can call in the loan at their discretion (in theory at least) - this is in contrast to your understanding so one us us is surely mistaken??!!!

However, judging from the posts on here (and common sense) the chance of a lender calling in a loan is unlikely, although a possibility (at least in theory)?

[JustinP1]

beccismith said:

JustinP1 said:

beccismith said:

I have spoken to a friend of mine at a large bank and he says that mortgages can be called in at any time by the lender and if the lender faces the possibility of having to 'pay' the customer if rates fall below 0% then they will simply call in the loan!

I would suggest then that your friend at the 'large bank' reads the Consumer Credit Act, as that (with respect) is a load of rubbish.

You can't just 'call in a loan' when you feel like it. That is the whole point in having a contract. Thats just silly. Even in practical terms, where are people going to get mortgage sized amounts from if they could be 'called in'?


The only times then can do this is on overdrafts where the right to recall the facility is part of the contract.

Thanks for the posts guys!

But Im a bit confused now - is my friend wrong then JustinP1 with regard to the Consumer Credit Act?

The way I understand it is that the mortgage companies can call in the loan at their discretion (in theory at least) - this is in contrast to your understanding so one us us is surely mistaken??!!!

However, judging from the posts on here (and common sense) the chance of a lender calling in a loan is unlikely, although a possibility (at least in theory)?

It is whatever the loan contract says. I was actually unaware that hidden in my own mortgage contract in the T&Cs is the '3 month notice' option so thanks for bringing this up!

Without that being in the contract they would not be able to call in the loan at all. These type of clauses are usually always in overdrafts which is more like a 'rolling' loan.

However standard loans are regulated by the Consumer Credit Act. The terms of these loans are fixed from the start. The only way that they could call in a loan in this case would be if there was a 'default' situation where you did not pay. Only then could they ask for the full amount back.