It is Obvious

Chris Rick has got altogether too much to say

Hey! I’ve had a really cool idea…

Posted by chrisrick13 on May 30, 2011

It is obvious: a lot of companies have money problems

A number of year ago I (we) decided to buy a second home.  There were plenty of reasons but the main ones were:

1.  There had been a big slump in house prices and they were on the way up.  I thought that it would be that way for some time to come.
2.  I had been ill and did not really know what my work situation would be, so rather than expanding the house-size that we lived in we could get a second and could sell it if we couldn’t support it.
3.  It could earn its keep as a holiday rental and we could still spend time in it.
4.  For some reason I was nervous about giving lots of money to pension companies: give us lots of money and at the end of 30+ years we’ll give you some back…honest guv.  I thought that diverting some pension money into another property meant that I could actually use it and live in my pension.

We did it and, roll forward 15 years, it is the best thing we have done.  We can spend time in Dorset and each year it does not cost us much at all.  At the moment we have an, unrealised, potential capital gain that far exceeds what pension payments might have given us.  Should have sold it a while back, but we like it too much.

When we bought it we got a mortgage from Nationwide.  Told them what we were doing and for 15 years all has nearly been OK.  I paid off at an accelerated rate to shorten the loan period.  Then I paid off a lump sum for which they charged me £90.  I know that they did not incur £90 of costs, but I guess that I was not keeping to my original agreement.  I now owe £127 on the mortgage and my payments are £1.67 a month.  To pay it off early will cost me £127 plus the £90 redemption fee.  I keep it on as it provides a simple way to re-mortgage or mortgage another property.

Last week I got a letter from the Nationwide.  They have noticed that I am dealing with the mortgage from a different address to the property that the mortgage was taken out on.  If I am letting it out they want to know and charge me £50 to record that in their system.  They also want to increase my mortgage rate by 1.5%.

As you might imagine I am incandescent over this:

1.  I told them that I was going to rent the place out when I took the mortgage 15 years ago.  I am disinclined to pay them £50 to record that fact now when I told them a good while ago what I was doing.  If they don’t have it in their system that is not my problem, nor my cost to re-record it.  Indeed I am thinking of charging them for my effort.

2.  The mortgage is on a property that earns an income unlike a mortgage on a home that does not.  It has long been my understanding that the interest rate on a loan is strongly correlated on the risk associated with the loan.  That includes the likelihood of default and the assets tied to the loan that can be used to repay it should there be a default.  On a £300,000+ property with a £127 mortage that earns over £12,000 a year I might have thought that my interest rate would be quite low based on risk?

3.  Why am I being singled out for special treatment just because I happen to have two houses?  I only have a mortgage on one of them.  Maybe I live in my main house in Dorset when I can and have an apartment ‘in town’ that we spend our time in and use that address for all the management of our affairs?

No, someone in head office has had a bright idea about ways to squeeze more money out of people who can jolly well afford it.

As you might imagine, I spoke to someone at the call centre.  Their letter had talked about letting the house out.  I asked them what their definition of ‘letting’ was.  She did not know.  I explained that I rented it out, but otherwise we lived there as much as we could (not very much, but still as much as we could).  She kept going back to the mortgage people and coming back with “don’t knows”.  I asked her how I was supposed to make a judgement about my declaration to the Nationwide based on a technical definition that their own experts did not even understand…she did not know.  She suggested that I wrote a covering letter to them.  I fiercely remonstrated with her.  Did she think I was unemployed with nothing better to do with my time (sic)!  I lost it and said that I and my family was withdrawing all out money from the Nationwide and I would start by putting some back in and paying off the mortgage in full…now (idiot).  Not easy to do this it seems, but she entered into her system to pay £127 plus £90.  It came back and complained that it was a sum greater than the mortgage and would not let her do it.  Bah!

It is obvious: a lot of companies have money problems, but why do they all seem to queue up at my door for money to help them out.

3 Responses to “Hey! I’ve had a really cool idea…”

  1. Mark said

    It’s easy to be wise after the event.

    It is obvious, you should have paid the £50, and accepted the 1.5% rate rise, and smiled.

    Perhaps you still can?

  2. Bill said

    It would seem that most big companies are playing a game with you whereby they can change the rules and you can’t. Like with Inequitable Life who didn’t downgrade the value of my ‘pension’ but said that there would be a administrative charge of 10% (I think) for withdrawal.

    We have just had a letter from the Halifax saying that the fixed rate ISA is coming to and end and that to get the rate of 3.8% for two years we should phone immediately. We did and it was only at the end of the conversation that they slipped in that the rate would not necessarily be 3.8% but whatever the rate was at the time the current term ended (in fact it has already gone down to 3.5%). So basically ‘whatever we say it is!”

    I’m afraid that the world is neither fair nor logical…

    Don’t even start me on super-injunctions where a remark that mentions that Celebrity A is knocking off Celebrity B on twitter could get you a 2 year jail term, which nobody could talk about (not that we would talk to anyone about you being in jail) as it might reveal that a super-injunction is in place. We are lucky that such injunctions are only for the super-rich (£80k+ in legal fees) otherwise they would be available to you and me and what a mess that would make of society!!

  3. Bill said

    Sorry ’bout the above – put the rant down to being a senior citizen!

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