Bank of Ireland increase differential on tracker rates

I have a Buy to Let mortgage taken directly with the BOI & the interest condition reads somewhat different to some of the other posts on here.

It reads after the fixed rate period ends that " After this date the interest rate we charge will track base rate for the remainder of the mortgage term at a fixed differential of 1.75% above base rate. We will not change the Differential under any power given in the Mortgage Conditions "

I take it therefore it will not apply to this mortgage if my understanding is correct.

I am continually amazed at how some banks think they can rewrite the rules. Play the game. Complain. Reject their letter. Ask them to fully explain what they are doing, where in the contract it says they can do it. Reserve your full legal rights and say that you are now in formal dispute.

If as you say you cannot see how they can do this then they probably can't and are trying it on.

If the facts are what you say then clearly they are the ones in default not you. The courts will never to agree.

I suspect its a try on of the big and mighty thinking they can take on the small man who cannot afford the legal expense.

Complain. Not on the telephone but by registered letter. Keep you correspondence records. You will need them for court - if they don't back down.

This was done some time ago by Skipton Commercial too - differential raised to over 3%. Complaints procedure did not get me anywhere. I was furious. They told me they had to look after the interests of their savers.... Happy enough to take over the odds from me all the time the interest rate was higher....

Had my fingers crossed none of the rest would do it.. Not had my BoI letter yet but not looking forward to tomorrow's post.

Hi Lee. I too have had a letter from this bunch increasing one of my mortgages in the same way as yours. This was took out in 2003. I have three other mortgages took out in 2006. Fearing the worst I rang them to be told that it is only the one mortgage as "regulations changed in 2004". Obviously the small print changed and prevented them from doing this.

From early perusal of the documentation it all hinges on "valid reasons". I am putting a letter of complaint in disputing the validity of the reasons and also the fact that the original contract was unfair under the "Unfair Terms in Consumer Contracts Regulations 1999, as it did not specify the reasons in the Mortgage Offer, but instead referred to the Mortgage Conditions 2002 Handbook. Therefore not contained within the contract. Check out the FSA guidance from Jan 2012 "Unfair Contract Terms: Improving standards in consumer contracts" paragraph 3. 5. (1) 3.7, and 3.16. If helpful I will post a copy of it on here to assist. It may not achieve anything but if they write back dismissing it then it's off to the Financial Ombudsman. If enough of us do it then it might have an effect. They state they have been through the FSA in their booklet but every borrowers situation is different and that might be where they have not took everything into account.

This thread has made my blood run cold. I have one original BofI mortgage at 0.4% over base and two formerly B&W at, I believe 1.5 over. If these went up to 4.99% it would cripple us.... We were offered money to redeem our mortgages a couple of months ago and i Am wishing now that I had. I guess I could remortgage, but the properties are struggling equity wise due to a massive downturn in the local market, and of course it will cost money to do this anyway.
We are prepared for interest rates rising, we are not stupid, but an overnight hike up of 4% is going to hurt!
I too am dreading tomorrows post.

Update: my B&W product information supplied prior to accepting the loan states "after 2011 the rate changes to a variable rate which is 1.49% above Bank of England base rate...." so I think that one should be ok. Other BofI both state they "will not change the differential under any power given in the mortgage conditions".
I will wait and see what happens!

Hi Gary

Are you saying this increase only applies to mortgages taken out Before 2004?

Hi Rob. It's only what they said to me on the phone when I asked if my other three mortgages will be increased. They said that the regulations changed after 2004. Interestingly enough I took out a further advance on the same property in 2005 and that has not increased.

Perhaps we need to find the common denominator across the contributors to see if it's mortgages pre 2003. Or is it mortgages where they know we have equity and can move them ? Reducing their mortgage book. Something is not quite right here
They tried to get me to redeem two mortgages on flats in Grantham a few months ago by offering 5k on each one but I didn't take it as they are high LTV and I would have needed to pump money in to get a remortgaged. Yet I have not had letters on those. In fact thinking about it this property is the only one where I have equity sufficient to remortgage.

We had a very loan with BOI , previously B & W , we had made every payment and were paying higher rate than your quoting , the loan matured and they would not renew at at any rate.

The BOI needs money, that is the simple answer here, and when they get a good rate from you, they can sell it to some other lender, no lender wants the current deal, and I think BOI wants cash.

We are now with a new lender and our rates are going down and not up, if I were any of you I would complain like hell.

Or you move for a better deal and BOI gets the surplus cash it needs, more fool you, fight , complain, get together, Base rates may go down, but what happens if they go back up, and BOI has out your rate up.

They did us a favor, but at the time the press were saying how desperate BOI were, does news get forgotten so quickly

Check out this ruling from the Financial Ombudsman:

http://www.financial-ombudsman.org.uk/publications/ombudsman-news/50/banking-contracts.htm

Upholds complaints in cases where early repayment charges buried in mortgage conditions

50/1
whether firm brought early repayment charge fairly and reasonably to customer’s attention before making mortgage contract
Mr W borrowed money from his bank (firm A) to help buy some properties to rent to students, as part of his business. This was a commercial mortgage, and it was at a fixed rate of interest for the first five years.

Eighteen months after taking out the mortgage, Mr W decided that as interest rates had fallen he would repay it and take out a different mortgage with another bank – firm B.

He was shocked when firm A insisted that he would first have to pay a large early repayment charge. He complained, saying he had known nothing about firm A’s right to make this charge, and that the amount demanded was, in any event, unreasonably large.

Firm A rejected Mr W’s complaint. It told him that the charge had been clearly set out and explained in the mortgage terms and conditions and that it was binding on him as part of the contract. It also said that, before Mr W had agreed to take out the mortgage, a member of its staff had explained the early repayment charge to him.

complaint upheld
The firm’s right to demand an early repayment charge was an onerous term. So Mr W could only be bound by it if the firm had brought it fairly and reasonably to his attention before he entered into the contract.

We examined the mortgage documents. They did state that an early repayment charge was payable if Mr W repaid the loan in the first five years. And they set out how this charge would be calculated. But the firm had not given this information any prominence. It had placed the information in the small print of its mortgage conditions (on page 5, in clause 24). And it had not mentioned it in any of the other mortgage paperwork (for example, in its mortgage offer letter).

Moreover, we were not satisfied that the firm had explained the charge to Mr W in a face-to-face meeting before he took out the mortgage, as it had claimed.

We concluded that the term concerning the early repayment charge was not binding on Mr W. We ordered firm A to allow him to repay his mortgage without incurring the charge. We also awarded Mr W £300 compensation for the distress and inconvenience he had been caused.

50/2
firm fails to give early repayment charge due prominence in documents issued before making the contract – whether the charge still binding
Mr G’s situation was similar to that of Mr W in the previous case (50/1). But the firm in Mr G’s case accepted that it had failed to give due prominence to the early repayment charge in its mortgage terms and conditions or its mortgage letter.

The firm argued that, despite this, the charge was still binding on Mr G. It said it had explained the charge in a notice it sent him just before he drew down the loan. Unhappy with the firm’s stance, Mr G came to us.

complaint upheld
As the firm admitted, it had not referred at all prominently to the early repayment charge in the original paperwork that was present when the contract was made. But the contract had been made at the point when Mr G accepted the firm’s mortgage offer by signing and returning the offer letter.

The firm had not drawn Mr G’s attention to the early repayment charge before this point. It was several days after he had signed and returned the offer letter that the firm sent him the notice about the charge. So Mr G was not bound by the term relating to the charge. We upheld Mr G’s complaint and told the firm it should not apply the charge when he repaid his mortgage.

Might be a different issue- differentials over early repayment charges but the principle is the same. I shall be using this in my complaint letter.