by Peter Jacobs
A raft of new fees and changes and a massive increase in the interest rate if you need to rent out your home will come into force later this year from the Nationwide Building Society.The new fees that are being introduced are thought to be raised because so many people have reverted to the Nationwide SVR standard variable rate that the mutual organisation needs to raise money in other areas of their business. Although their SVR is not one of the lowest in the market place it’s certainty lower than most of the new deals for new mortgages and remortgages that they offer so customers are simply not changing over because they just don’t need to. It is thought that 500,000 of the 1.4 million mortgage holders at the Nationwide are on their standard variable rate mortgage interest rate.
Renting your home out just got more expensive
One of the biggest changes is to hike all interest rates by a whopping 1.5% for those people who need to rent out their home for more than six months perhaps because they can not sell it or because they have been posted overseas with their jobs. For existing borrowers who are renting out this increase comes into effect on September 1st and for new borrowers on December 1st. This change is thought to add around another £129 a month to an average £150,000 mortgage loan.
More fees and more charges
New fees and charges have also been introduced and these include a £75 fee if you want to apply to rent out your home (on top of the rise in the interest rate as noted above) a £50 charge for switching a loan from interest only to a repayment mortgage or vice versa and a £20 fee for change the terms of the loan.
An internal memo that has been leaked says that “the charging of fees will generate significant income for the group”
The company has already written to all of its mortgage customers informing them of this change in the interest rate and the introduction of the new charges so if you are a Nationwide customer then look out for this letter which will be coming through your letter box very shortly.
Additionally from 1st December they are removing the CAT standard rules for any mortgage taken out between 2001 and 2003 which stated that rates would never rise above 2% above the Bank of England base rate. Although the mutual said that this change would not have an impact on current interest rates they said that borrowers would no longer have the guaranteed three months notice of a change in the terms of their loan including increases in the rate of interest.
Nationwide also said that “we feel that it is fair that costs and fees should be borne by those customers who make use of these services rather than all costs being borne by all customers” but as part of these changes we didn’t see that other fees or rates were being reduced because customers who didn’t use these services should not have to pay using the argument that Nationwide put forward.
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