Intelligent Finance changes terms on Mortgage Contract

by Readers Question

10:18 AM, 19th May 2015
About 4 years ago

Intelligent Finance changes terms on Mortgage Contract

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Intelligent Finance changes terms on Mortgage Contract

I have a residential offset mortgage with Intelligent Finance (IF). Intelligent Finance changes terms on Mortgage Contract

I took this specific mortgage out as it had specific features that appealed.

  1. The offset worked from money held within your bank accounts
  2. Throughout the term of the mortgage you could apply to draw down on the equity built up (subject to some affordability rules)
  3. The mortgage is portable.

However it’s seems that IF have decided to change the mortgage contract and have withdrawn both feature 2&3 without my agreement.

Are they allowed to just change the features of the mortgage to suit themselves?

Has anybody else experienced similar changes by lenders?

Thanks

Leigh



Comments

Mark Alexander

10:26 AM, 19th May 2015
About 4 years ago

It seems to me that IF is a good name for several morgage lenders, i.e. these are our terms for the remainder of your mortgage IF we don't decide otherwise!!!

This smacks of West Brom and BoI all over again. Barclays/Woolwich also did something similar on their accounts of this nature - see >>> http://www.property118.com/barclays-offset-mortgage-customers-take-heed/38254/

Mark Smith (Barrister-At-Law)has agreed to look at your offer letter, T&C's and the latest correspondence from IF free of charge at this stage. In the first instance, please scan and email this paperwork to me - mark@property118.com
.

Jim S

10:14 AM, 23rd May 2015
About 4 years ago

Hello Leigh,
IF did the same to me, they wrote to me early last year and said anyone who wants to do a further advance on their personal home mortgage must apply by a certain date. When I applied over the telephone their staff were horrible and uncooperative, they tried to make things as difficult as possible. They refused my application initially stating that I did not earn enough to warrant the further advance (I had taxable profit of over £144k that year for a total mortgage of £246k) I raised a formal complaint with them and then they changed the reason to: "we are worried that your £600,000 rental income will go down and you will not be able to afford your mortgage repayments" I then wrote to the financial ombudsman (They are useless by the way) who wrote back and said that they have no control over how a financial lender assess their risk, they just copped out! I wrote to everyone except 118, the financial conduct authority, council of mortgage lenders, financial times, anyone. I intend to see a barrister and see what my legal position is but have been so busy(I shall contact Mark Smith), this is the only route left open to me as otherwise it's stay where I am or remortgage. I'm not in any rush as I don't need the cash but feel that they have really took the mick out of me. For a read of the full letter to the financial ombudsmen then read below.

Financial Ombudsman Service
South Quay Plaza
183 Marsh Wall
London
E14 9SR
17th June 2014

Re: Application for a further advance on my personal mortgage with Intelligent Finance
Plan Number: P?????

Dear Sirs,

I would like you to investigate a formal complaint that I have raised with my personal home mortgage company, Intelligent Finance, and their response which I feel is wholly unsatisfactory.

I have applied for a further advance on my personal home mortgage as Intelligent Finance had written to me to state that after 11-04-2014 they would no longer be able to offer additional borrowing. I duly applied and was refused. They have now confirmed to me in writing that the reason for the refusal is because they consider that I will potentially not be able to keep up with my mortgage payments and that they would not be lending in a responsible manner if they allowed me further borrowing. Please note that my application was made before the mortgage market revision reforms of 26.04.2014 and so they were not restricted at that time by the introduction of these rules.

The reasons that they cite to support their decision have been based on the fact that I have a large property portfolio worth about £8,000,000.00 with borrowings of £6,000,000.00. I attach my property portfolio financial position which shows a gross profit before tax of £360,000.00 per year. My annual return for 05.04.2013 shows a pre-tax profit of £144,471.00 and after payment of tax I had £93,557.00 or £7,796.00 per month to service my personal outgoings. The monthly cost of my mortgage at present is £262.89 per month, which leaves me with £7,533.52 per month to pay for my normal utility bills and living costs. Please note that I have no personal loans or other financial commitments and no dependents or children. Intelligent Finance have told me that this monthly take home pay is insufficient to service the additional borrowing that I have asked for which was £146,073.40 at the very favorable interest rate that I currently pay which is 2.5%.

I applied to borrow the maximum further advance that I could with Intelligent Finance, which was £146,073.40. I have calculated the monthly mortgage payment for this additional borrowing on an interest only basis to be £304.32 per month. Please note that I currently have an interest only mortgage and the option to have this again on my further advance would have been extended to me. My mortgage has a 15 year term left to run and the repayment plan that I have in place to clear my mortgage borrowings at the end of the 15 year period is to sell one or more of my 40 investment properties to raise the necessary capital.

When I applied for the further advance with Intelligent Finance, they verbally stated that all they required was proof of an approved repayment vehicle, of which having clear equity levels in one or more properties would be sufficient. I have demonstrated to them that I currently have the best part of over £2,000,000.00 of clear equity available. In 15 years time, I expect this to be £10,000,000.00.

Intelligent Finance has stated that they are worried that the rental income on my 40 properties might “go down” or even “stop coming in”. I do not consider this to be a reasonable consideration, as rents do not go down over the course of time, they in fact go up! I fully understand that rents can drop back a small percentage from time to time but this is very unlikely to occur and I am certainly not at a rent level now that will be falling back. All my rents will be going up at the next rent review, which is now 14 months away. Even if rents did drop backwards, I still have an extremely healthy cash flow balance that would absorb this. To say that all rental income on 40 properties could stop coming in is a Dooms Day scenario and it is just not logical to think like that. Even if several properties were to all become vacant at the same time, this would not cause a financial problem for several months. I have been renting property for 25 years and consider myself a professional Landlord who is diligent enough to ensure that situations like that do not occur.

My property portfolio is stress tested to ensure that I can still comfortably continue in business at 5% base rates. I believe that to make such assumptions about a person’s business is unfair and unrealistic. What do they do about other self-employed people whose business situation could change at any given time? Are all of these people un-mortgage able? How am I able to pay all of my loans now as I have done for 25 years? How have I paid £50,900.60 tax this year if I am such a gamble?

I put the case to Intelligent Finance that in order to mitigate any assumed risk that they may have, that I was willing to take out a mortgage indemnity policy which would fully cover them for any mortgage payment shortfall. They have refused to accept this stating that they just want a clean application.

When I first applied for a mortgage with Intelligent Finance 10 years ago, they knew my business and were happy to take me on as a customer. I am now more successful than 10 years ago and now they consider me to be a unsatisfactory customer. I believe that Intelligent Finance have a duty to continue to do lending with me as they were the one that I chose to be my financial provider and they in turn accepted me as a customer. Such a relationship has established a commercial duty for Intelligent Finance to offer me a matching further advance mortgage product and interest rate for any further borrowing of the same loan. I believe they should honor further borrowing to existing customers who are still in the same business that they were when they started their mortgage.

It is interesting to note that Intelligent Finance are owned by Halifax, and yet the Halifax are willing to offer me a completely new mortgage for an excess of £260,000.00 on an interest only basis at 2% higher interest rate than what I am applying for with Intelligent Finance. It appears that I am solvent enough to afford a higher mortgage at a much more expensive interest rate but not able to afford the cheaper interest rate??

I believe that Intelligent Finance do not want to give me this further advance borrowing because it is an extremely advantageous interest rate of which they are obliged to give their existing customers. I think that they are looking for excuses and I believe that they are in fact in breach of discrimination laws by singling out my property business and making the wholly unfounded assumption that my property business will fail.

I have tried to work with my mortgage provider to overcome their concerns and come up with solutions. I have even suggested a further advance borrowing of a smaller amount but they have stated that I am not even able to afford an extra £1,000.00.

Please can you take the time to review this situation and give me your thoughts. I have also contacted the Financial Times to see if they want to run a feature about this situation. I have contacted Martin Lewis at Moneysavingexpert.com and Vince Cable MP. I am also considering legal representation from a Barrister to sue the company on the grounds of discrimination. Can you also please ask Intelligent Finance how many recent further advance mortgage applications (Say in the last 12 months) have been successful ie 80% or 90% etc as I believe that Intelligent Finance are just blind siding applicants and looking for excuses to not lend.

Yours faithfully,

Jim

Documents enclosed:

1. My applications letters to Intelligent Finance showing dates sent by fax and post, 3 letters in total.
2. Response letter from Intelligent Finance Re: my formal complaint. (Their first and final response).
3. Copy of Intelligent Finance Terms and Conditions as at 2002 from when I first applied for the mortgage with Intelligent Finance.
4. Copy of my current financial position of my investment property portfolio.
5. Copy of my Annual Tax Return for Y/E 2013
6. Copy of the original mortgage offer from Intelligent Finance

Lynne Davis

10:47 AM, 23rd May 2015
About 4 years ago

IF withdrew from the mortgage market a long time ago and are trying to get rid of all their banking customers now too. I re-mortgaged away from them several years ago but kept my IF current account and also opened an iSaver, which was offering the best rates at the time. They have brought the interest rates down and down and eventually started sending me letters saying, "Look how rubbish our rates are - you'd be better off putting your money elsewhere, so please consider moving banks." (I paraphrase but that really was the gist.)

They are going to make themselves as unattractive to you as possible, in the hope that you will up sticks and leave.

Shakeel Ahmad

11:46 AM, 23rd May 2015
About 4 years ago

I am in a similar position with BOS.

BOS is part of HBOS.and indeed you are right that they don't want to lend at the rates that you mention.

Ombudsman is useless and just job for the boys. While I accept that they cannot be assessing risk. In your case they are not assessing the risk. All they have do is to honour the terms of the mortgage that you signed. The & conditions was for the duration of the mortgage.

Further the Ombudsman takes ages & the Financial institutions knoiw that by that time you as may not need the funds as no buyer is going to wait for your solve your issues with the lender.

The only satisfaction that you may have is that your complain will add to complaints against a Financial institution & they have to pay around £500 to the Ombudsman.

Do let us know how you got on with the barrister.

Leigh Gillard

16:32 PM, 23rd May 2015
About 4 years ago

Hi mark. Thanks. That's a great offer. I'll be back home next week and will scan and send


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