Bank of Ireland increase differential on tracker rates

Here is, I hope, another interesting angle to all this. Comments welcome.

Suppose you apply for a Bank of England lifetime tracker mortgage and pay the valuation fee (which naturally has a decent profit in it for the lender over and above the cost of the survey and credit referencing costs).

Then, later, once the mortgage is approved, you receive the full mortgage offer documents.

At that point you discover there is a term or condition that would have meant you would not have proceeded with the original application had you known about it before.

A typical example, present in many mortgage offers now, might be, "We reserve the right to increase the margin over base rate in the event of unforseen credit conditions or competitive prssures." Another clause might be the "BOI get out clause".

As this rather important clause was not made clear or bought to your attention when you applied for the mortgage, would a potential borrower have a fair claim to recover the mortgage valuation fee he had paid earlier?

At LettingFocus, we are not lawyers, so have to confess I don't know the answer.

Comments welcome, especially from m'learned friends who may be reading this, including Justin?

Also, if such a key "get out" clause was not made clear up front, is it fair for such a mortgage to be marketed as a "base rate tracker" in the first place?

David, I totally agree,WHEN IS BASE TRACKER RATE, NOT BASE TRACKER RATE
Answer, when you hide a get out clause in the small print.
A definite case of MISSELLING
Murf

Comment to Steve Badger - Steve it appears the reason we did not reply to you is because we do not have your email address on file. Could you please email me directly at justin@lawdepartment.co.uk

Thank you

David & Murf - Totally Agree. It does seem sometimes banks want it all ways in their favour.

The tide may be changing against lenders though.

A London Assembly committee yesterday, came out against lenders restrictions on landlords letting to HB tenants, 12 month max tenancies and not allowing loans in areas where selective licensing is in place.

This follows evidence we, at LettingFocus, gave to the London Assembly public committee looking at the PRS back in December.

At the cttee hearing we said such restrictions were often illogical from the lenders' own business point of view, apart from being just plain restrictive to the PRS market.

Since then, two major lenders have reversed policy and allowed lets to HB tenants. Whether this was due to the fact they realise there is no real business case or whether it is due to public pressure is a debateable point. It is good news for landlords though and we are delighted that the cttee listed to us.
(Don't agree with many of their other recommendations though!)

I think the spotlight will now be very much more on lenders doing the right thing and not trying to invoke hidden clauses.

First of all I apologise for being a little mischievous in this post.

Now here we are all being charged hundreds of pounds a month in illegal (or so we hope) additional interest charges. Now if this was the other way round and we owed BOI money each month what would they do? That's right - they would write to us charge us £25 for a letter, and threaten he'll and damnation if we did not pay up. Eventually, if we did not pay, then we would be taken to court for possession and mortgage arrears.

What if we all started to do it to BOI?

Monthly letters, added interest, and then when it's a decent amount go to HMCS online, pay your £60 and put them in County Court.........x 12,000 borrowers.

Now I know the legal eagles out there may say it cannot be done etc but it is a thought is it not?

Gary - not wishing to rain on your parade, but I am afraid that won't really wash entirely. There will be a clause in the terms and conditions which states that you will be liable to pay for the banks costs (such as admin costs) where you are in default - however there won't be a reciprocal clause in your favour, where the bank is at fault. There is a question as to whether or not those terms and conditions are enforceable, but that is a discussion for another day.

Notwithstanding this, it is my intention - firstly in relation to those borrowers who have had the increases reversed and then hopefully for everyone else, to make a claim for a refund of everyone's reasonable costs incurred to date. I am going to wait for the outcome of the current investigation by the OFT, FCA and the FOS before pursuing this and will keep the forum updated of any further news.

I had to chase BOI up for my refund. Received it today. As promised, I will donate it tomorrow to the landlords campaign.
I am still suspicious of BOI because if the increase does not affect flex mortgages taken out after 2004, then why have they removed "from the date of this letter until the end of the mortgage term, the interest rate we will charge will be 1.50% above the BOE Base Rate." when it is not necessary or applicable to this 2008 mortgage..
I have just used the drawdown. The standard letter arrived today and the above wording has been removed.

Hi Christine, I've just heard from my business partner, he was calling to let me know that you have made your donation to The GOOD Landlords campaign as you promised. Thank you so much, I promise you it will be put to good use 🙂

Hi Justin et al

I have just received my formal letter of rejection from BofI - is it too late to sign up for the class action?