Nationwide Turns On It’s Buy To Let Mortgage Borrowers

Nationwide has dropped a bombshell recently by announcing a 1.5% rate rise for any mortgage attached to a buy to let property which has been let for three years or more.

With the Nationwide base rate mortgage currently set at 3.99% this represents a 38% rise in mortgage costs for those buy to let investors on the Nationwide BRM mortgage.

Lets say that again – Nationwide will be increasing their mortgage rates by 38% soon. Ouch!

I know that Nationwide are currently not charging more “commercial” rates for their residential mortgage customers who subsequently let out their house (mostly because they cannot sell it, even if they want to) and I also know that Nationwide are giving these customers 3 years grace before hitting their customers with this large rate rise, but how can they justify such a large increase?

Well, Nationwide say this “The revised rates and charges help to ensure that the costs of the services we provide are met by those that use them, rather than the membership as a whole.”

They then go on to say “When properties on a Nationwide residential mortgage are rented out we too experience this additional risk and administration costs and it is only fair that those people who rent out their property should meet these additional costs rather than the membership as a whole”

When you think about it, these reasons do not really hold water because:

  • They are only raising the rates for properties that have been let for three years or more. Well presumably the mortgage has been paid month by month during this time, otherwise Nationwide would be foreclosing on that property, so at the three year mark it seems that risks attached to that rental are actually reducing as there is a three year history of successful mortgage payments.
  • What increased administration costs? Sure it might take an hour or so to process the paperwork when the property owner informs the Nationwide that they intend to let the property. Well, that cost will be covered by the new £50 additional “letting application fee” that the Nationwide will also impose.

There is no way that Nationwide can justify a 1.5% rate rise on every months payments by increased administration costs and risk. In fact I think that they may be increasing risk to themselves by this measure and here’s why.

The 1.5% hike in rates will mean that someone with a £200,000 mortgage will pay an extra £250 per month and this is at a time when when mortgage rates are low. What happens when mortgage rates start to increase again, which they will either because of increased interbank lending rates, or a rise in the base rate to combat the high inflation that the UK is experiencing?

For someone who is renting their house on narrow margins, this additional £250 monthly cost could force them into loss, making the let uneconomic. That landlord will either try to increase rents, which may not be feasible, or try and sell the property, which may be difficult to achieve also, particularly if there is a sudden influx of sellers on the market.

It is therefore more likely that a landlord will default on his mortgage with the Nationwide when hit by this large increase in mortgage rates.

So what is this rate hike really about?

I believe that it is a very easy way for the Nationwide to boost its profits – hitting customers who are soft targets, and who the Building Society obviously does not value as customers, even though they may have been with the Society for a long time and are very likely to have a good repayment history.

This punitive rate rises will take effect from 1st December 2010. That gives any landlord affected by this 6 months to find a better deal. Borrowers affected by this news should vote with their feet and take their business elsewhere.


  1. Has anyone successfully contested this unjustified hike in interest rates for those who did not have a fixed rate deal? I ask because i have a complaint in with the Financial Ombudsman at the moment but they have written to me saying they have a very heavy workload at the moment – so it seems to be taking a very long time and in the meantime NW are like bloodsuckers preying on my bank account each month.
    I should also like to know if NW have written to those on a fixed rate (the ones who didnt complain) and told them that the rate doesn’t apply to them?
    I’m asking this just because I need to know how far their ‘fairness’ and regard for their customers has actually gone down the pan.

    • Hi everyone,

      I am also planning to contest the Natiowide 1.5% hike on my 10 year fixed rate mortage (5 years left to run) for letting my house out – does anyone have any information they would be willing to email me ( that I could sway the argument for me please? I have asked for the original terms and conditions to be sent to me (which I hope states that they cannot apply any charge until the fixed term rate ends) – My mortage was taken out in Dec 2006 and I have had permission to let – if anyone has had success with similar circumstances I would be very grateful to know. Thank you.

  2. Ive recently taken out a 2 yr fixed rate mortgage to purchase a flat. I’m now having to relocate due to work and need to rent it out. Rather than suffer the additional 1.5% which I would struggle to afford, I was consdering forgetting to inform NW that the property was being let. What’s the worst that can happen? How would they find out?

  3. This increase is a mugging and a disproportionate one. As a landlord I would seek to pass the increase to my tenants who I might add only rent because they are saving for a mortgage. So
    indirectly the Nationwide are screwing the folk who are least able to afford it. A pox on the
    niggardly money grabbing person(s) who put this forward. Human rights demand a fair hearing whereever a decision is made that affects us. It does not just apply to courts. When did I get my chance to speak???

  4. well they just started charging me the extra 1.5% with the March payment notwithstanding my objections and their inability to contest my points (above). The extra 1.5% actually means an increase of 50% in my monthly payments – daylight robbery, i’ll avoid NWBS like the plague in future.

  5. Well, well, well, some weasel words from the “Mutual” Nationwide saying that it will now wait until the end of any fixed rate mortage period before levying this 1.5% charge on its loyal and longstanding and credit worthy customers. So you can no wait if you want to jump ship to another provider at the end of the fixed rate and not incur an ERC.

  6. Jeremy,

    i am in the same position as you, a letter last year informing me of a future rate change and nothing since- I’m searching on-line this evening for an explanation!

    I haven’t complained to Nationwide, but am very unhappy with their recent treatment. Have been a customer since a child, had car insurance, house insurance and two accounts and am in the process of removing all of these.

    ill check back and if I find out anything will post.

  7. I have 2 fixed rate mortgages on the same property. I wrote a letter to NW 17/12/10 and received an answer from them 29/12/10 saying that they will not now start the extra 1.5% charge until both fixed rate mortgages have finished (last one on 30/4/13). I wonder if they still going to charge people who don’t write a letter of complaint…

  8. I am on a variable mortgage and was forced into letting because my job took me overseas. If NW can put a 1.5% penalty on my mortgage whet stops them putting 10% on next year?
    Has anyone not in a fixed rate period successfully contested this?

    • We’ve not heard of anyone who has successfully contested the penalty charge on variable rate mortgages, however you should file an official complaint with Nationwide, following this complaints procedure.

      The more customers who complain and make senior managers at Nationwide aware of the strength of feeling about the penalty charges, the better the chance of them reversing it, though in all honesty I am not hopeful that they will revoke the penalties for variable rate mortgage holders.

      • I logged the complaint as per your fact sheet, no complaint number was issued, but they did say that they would send one to me by way of a letter.
        My complaint was:-
        A +1.5% interest charge will actually increase my monthly payments by about 50%.
        I have never missed a payment in 20+ years.
        I also have a savings account in NW paying almost no interest.
        There is no extra risk or work for NW
        Also as a non UK resident I cannot remortgage and so I am more tied than someone on a fixed rate. My only way out is early redemption.
        Interestingly they didn’t contest any of these points and I have to say that they were polite and clear; they said that my complaint would be recorded but would make no difference to NW policy.

    • Chris – I so agree please see my comment below. But the whole idea of this ‘extra charge’ and allowing this to happen should be challenged – as you say the 1.5% could be just the tip of the iceberg. This is one of the main reasons I am fighting this.

  9. Hi we were on a fixed rate and just said we thought it unfair they could put a mortgage up mid term and trap us into it. Hope that helps. I think if you aren’t in a fixed term they will apply it.

  10. I complained to FOS and they replied that they couldn’t rule on policy decisions – please can one of the sucessful complainants please let me know what you put in your letters? Many thanks

  11. I received the letter notifying me that the 1.5% increase would apply from 1 Dec some time ago. It said I would receive a letter stating my new payment a couple of weeks in advance. I have not received such a letter, nor has my rate gone up (according to my online banking). I’ll know for definite with the payment this month. I did not make a complaint so has anybody else experienced this?

    • Regarding my post above, I haven’t found explicit information but it appears that mortgagees who have been letting their homes for more than 3 years will be charged when their current CTL runs out. I had renewed mine for three years in May 2010 and I think that the +1.5% charge will be added in May 2013.

      On a cheerful note: thinking that the rate would change in December I had applied for a let to buy mortgage in January 2011 from Nationwide owned ‘The Mortgage Works’. I was turned down for my ‘poor payment record’ as I was late on one mortgage payment a few years ago. Upsetting at the time but now realise this decision has saved me (and cost Nationwide) a few thousand in fees and interest payments. Small victories.

  12. OMBUDSMAN RULED IN OUR FAVOUR TOO!! – Having submitted a formal complaint to the Ombudsman in late September, We have also just had a letter from the Ombudsman saying that “following their involvement, Nationwide has now told us it will not seek to apply the additional interest rate until your mortgage is free from early repayment charges”. At which point, obviously, we are free to take our custom elsewhere without penalty. Hoorah!!
    I REALLY URGE EVERYONE WHO FEELS ‘TRAPPED’ BY THE NATIONWIDE TO PUT A COMPLAINT IN TO THE FOS – Nationwide seem to be only responding to customers who will not give up with their complaints – but when challenged by the FOS, they are (see posts above) agreeing not to apply the charge until people have a chance to get another mortgage elsewhere without penalty.

    • Received a letter today advising me that the extra charge will not be applied unitl the ERC has expired. This is good news and is what they should have offered in the first place instead of trying to rip everyone off. Will be moving accounts else where ASAP.

  13. Hi we have just heard from the Ombudsman that we will not have to pay the 1.5% until our fixed rate ends in 3 years time. However we are so upset by our treatment by the nationwide, as soon as our fixed rate is up we will look elsewhere for our mortgage. Very happy with the financial ombudsman – I urge anyone to complain to them about Nationwide’s treatment of the buy to let investor.

  14. I’m locked in to a five-year fixed-rate and stand to lose £70 a month to nationwide until August 2012. I’ve argued the case with Nationwide via a series of complaint letters but got nowhere; I currently have a complaint in with the Financial Ombudsman and urge everyone else who feels that this is unfair to do the same!

  15. Hi all,

    I just found out this week. I took out a 10 year fixed term late 2006 and have been offered a 3 year contract in the states. Nationwide now want to increase my rate from 5.18% to 6.68%. I also have an early repayment charge of £5590 if I decide I don’t like the deal. Effectively I’m being forced to sell my only home at a terrible time and Nationwide reaps profits regardless.

    I went with Nationwide because I thought they could be trusted i.e. they’re a building society not a cut throat bank. This was a huge mistake on my part.

    I took out a fixed term to lower my exposure to risk and then this happens. I’m devastated. Nationwide are cowboys. In one swoop they’ve cleaned me out of several years of hard earned savings.


  16. I have just found this site – and I am so relieved that others are so annoyed (to put it mildly) with Nationwide. I have been so upset and worried since I heard about this increase in my mortgage rate. Like many others here, I never intended to rent my house but was compelled to after I met my present husband and moved to the South West. I would have loved to sell my home but this proved impossible as I was in negative equity. I found tenants and pay for a management company to help me with all the risks. (Didn’t stop one of the tenants paying no rent and running off with the fridge!).
    However, I have absorbed all the hassle and the costs. NW has not had to bear any cost or risk.
    I intend to write to them and explain this. i doubt it will do any good.
    The reply to my last letter said that if i feel i am ‘experiencing financial difficulty as a result if this change’ I can speak to their Lending Control team who ‘will be able to assess the customer’s overall financial position and advise’ how they can help. i am loathe to do this as I dont want to appear as if I am begging them for help. I only want to pay what i signed up for a variable interest rate – and, as one of your early comments says – not the variable rate plus 1.5%
    i think the next step is the Financial Ombudsman but will give NW one more chance ….

  17. I rented house out in 2006 when we moved. I haven’t reapplied since then but the letter says if rented out for 3 years the charge will apply. I am confused by the statements above that reapplying now (as I didn’t in 2009 after 3 years, assuming I didn’t need to…) will delay the charge until 2013. Is this correct? The house has in fact been let all this time.

  18. The cost of funds has increased and as such Nationwide’s margins are being impacted. As a result the organisation is attempting to boost their profitability however and wherever they can.

    I can accept this move on all new mortgage contracts. I can also see the logic in applying this to existing variable interest rate or tracker mortgages – if those customers don’t like it they can go somewhere else. However, to apply this additional charge to fixed rate mortgages that were ‘locked-in’ before May 2010 is reprehensible. Even if it is legal it extremely underhanded.

    Customers who choose fixed rate products typically pay a little bit more in exchange for stability and the certainty that their repayments will remain the same. They also typically agree not to switch products or repay the loan before the end of the loan period without facing an early repayment charge (ERC).

    I am not a legal professional but I can’t see how increasing the interest rate on fixed rate mortgage contracts can be defended as fair or reasonable particularly when, in the majority of cases, these customers are already in excess of 5% p.a. on their home loans.

    Shame on you Nationwide

    • Avril… “Would it be possible to quickly apply NOW for permission to rent and thus give ourselves 3 years at least. Do you think we could? And is there time? We never asked before because we didn’t know we had to. Our tenants have been in since November 2007.”

      I am not a legal person, so you may want to seek professional advice, however… The fact that you ‘never asked’ your lender for permission to let is no defence. It is, insofar as the ‘just’ are concerned, ‘mortgage fraud’. And the lender could I think call for immediate reposession of the property in order to secure its asset – because you and your daughter have broken the terms of the agreement which was for residential occupancy only. (There are also tax liabilities that you should consider.)

      Sorry to worry you with the above. You should now sieze the moment and apply to let the property commencing NOW. In fact, as you will be on the lender’s BMR (Base Mortgage Rate) and not its SVR (Standard Variable Rate). You do not say how long, or if you are, fixed into you current deal. I’m assuming that the deal is coming to an end and that you will revert to the BMR(and not the SVR) if this is the case then you will be paying 4% per annnum on the borrowing – until the base rate of 0.5% changes, as it surely will. Hope this is not too perplexing and assists. Good luck.

  19. Am greatly encouraged by all these outraged comments. My daughter and I feel the same. We have a joint NW mortgage, although only she lived in the flat. Now she is married, it is rented out and the extra charges will be crippling for us both – we are on the current variable rate now. Would it be possible to quickly apply NOW for permission to rent and thus give ourselves 3 years at least. Do you think we could? And is there time? We never asked before because we didn’t know we had to. Our tenants have been in since November 2007.


    In 2001 the Government introduced a set of standards relating to charges, access and terms (CAT) that lenders could choose to apply to mortgages they offered. From December 1 (2010), Nationwide aims to remove CAT standard rules for mortgages taken out between 2001-2003/5.

    These promised rates would never rise more than 2 percentage points above BASE.

    Previously it had been claimed that with a CAT-standard mortgage you could be confident that no nasty surprises were hidden in the small print – and that the terms wouldn’t suddenly change for the worse.

    A CAT Standard Mortgage should offer transparency.

    All fees must be disclosed in cash up front before you take out the loan.

    All advertising and paperwork must be straightforward, clear and fair.

    You must be given at least six months’ notice if your lender can no longer offer you a mortgage on CAT-standard terms.

    So how many borrowers have been given six months notice? (May was not six months from September.)

    In my opinion (which is not legal or specialist but investigative) anyone fixed prior to the demise of the CAT Standard my have a claim against Nationwide, as the Cat Standard forms part of the initial ‘deal’ – prior to the end of the CAT standard which should by six months after the notice. (That’s not September.)

    Déjà vu

    In May 2003, Nationwide disqualified the majority of its mortgage product range from being Cat Standard by removing the capped rate from its tracker mortgages and increasing the fees on both tracker and fixed rate mortgages and it was then a leading advocate of Cat Standard when introduced by the Government in April 2000.

    Nationwide offered CAT standard mortgage products between 2001 and 2005 and it has now been decided to discontinue applying these standards to any mortgages that may still be subject to them. The reason why the Cat Standard is being removed is to allow it to make the ‘fee’ changes on residential lettings.

    However, as the CAT standards will be removed from 1 December 2010. But what if a mortgage deal comes to an end before then, Nationwide has a duty under the CAT standard to supply terms under the CAT up to that date. Doesn’t that give some borrowers a window of opportunity to avoid a letting fee?

    (In October 2004 the Financial Services Authority (FSA) replaced the voluntary CAT standards with new compulsory rules that all mortgage lenders were legally obliged to follow. I haven’t study these yet but will get back.)

    Nationwide states: “If the mortgage is ‘currently’ on our Base Mortgage Rate, it will retain the guarantee that it will be no more than 2% above the Bank of England base rate.”

    I would posit that if a mortgage product comes to an end before 1 December 2010 then Nationwide cannot possibly simply impose such a burdensome lettings fee. (At least not in the manner suggested. It may remove your right to let in another way though. But not unreasonably.)

    See Nationwide Building Society – Tariff of Mortgage Charges. (Effective until 31/08/2010)

    But is it September or December?

    The Nationwide claim that the new charges are ‘effective’ from 01/09/2010 , and from 1 December 2010. What does this mean?

    Well, Nationwide kind of provides the answer – then shoots itself in the foot. “From the 1 December 2010, where a Nationwide agreed letting arrangement is already in place, the additional letting increase rate will be applied for properties that have been let for 3 years or more.”

    Nationwide would surely need to produce evidence that agreement had been applied for in the three years prior to that date – and with no broken chronology.

    In other words if you did not apply to extend the original three years then no such agreement existed with the lender – or the borrower for that matter – because it lapsed. So apply for three years after that date.

    The letter states, “Our records show that as at 1 December 2010 you will have been renting out the property for 3 years or more.’

    Really? Then I invite Nationwide to adduce evidence in respect of this. (Nationwide spies take note.)

  21. You can phone Nationwide to complain about this rate rise by on 08457 302010 select option 4 and then option 4 again.

    The person I spoke to about this issue and the response that we’ve had on this web site, seemed pretty hassled, so hopefully Nationwide is receiving a lot of flak from this decision. I doubt that they will change their minds about it, though, unless they are forced to.

    Its interesting that they still want to attract new mortgage customers by reducing their mortgage rates!

  22. And this report from Nationwide’s “Preliminary Results Announcement” for the year ended
    4 April 2010 (Released 26 May) may be of interest:


    “Specialist residential mortgages are made up of £15.7 billion of advances made through our Specialist Lending brands, The Mortgage Works UK plc (TMW) and UCB Home Loans Ltd (UCB), and £3.0 billion arising from the acquisitions of the Cheshire, Derbyshire and Dunfermline portfolios. Loans were advanced primarily in the Buy to Let and self-certification markets. Buy to Let mortgages make up 66% of total specialist lending, 24% relates to self-certification mortgages, 7% relates to near prime and just 3%, amounting to approximately £0.5 billion, relates to sub prime, of which £0.4 billion was acquired as part of the mergers with Derbyshire and Cheshire and has been subject to rigorous fair value assessment at acquisition.”

    “Gross prime lending in the year amounted to £10.3 billion (2009: £16.7 billion). Gross specialist lending in the year of £1.7 billion (2009: £2.2 billion) was almost exclusively in the Buy to Let sector, with insignificant amounts of self-certified lending and no sub or near prime lending.”

    “We have continued to focus on affordability and loan to value (LTV) ratios in underwriting loans during the year. The average LTV of residential mortgages completed was 63% (2009: 60%), whilst the average indexed LTV of residential mortgages at 4 April 2010 has fallen to 48% (4 April 2009: 52%).”

    Second home owners, providing they meet their mortgage payments, are not near prime or subprime borrowres, or even buy to let borrowers as the above records – but “High Quality Borrowers”.

    Nationwide’s new policy, thereore, is contradicted by Nationwide’s own report. It is not seen as specialist lending whatsoever, and therefor should not attract a 1.5% increase “penalty”.

  23. It’s highly likely that it won’t admit to what it’s doing – because it has a hidden agenda.

    Nationwide simply wants to reduce its mortgage book: and fast. (Who knows what the new governemnt has advised or demanded to these lenders behind closed doors?)

    Put simply: Nationwide is encouraging (vulnerable) borrowers to leave. That they may do so paying off very large redemption penalties is purely the icing on the morgtgage cake.

    So, it you do leave, make sure you reverse the arrangement on that early redemption penalty.

    Isn’t Nationwide, having forced you to redeem early, liable?

      • I don’t mind at all, John.

        Thanks for posting this information. That FT article points to Nationwide suffering because of their lower margins with low rate mortgages.

        Telling, too is Nationwides view, in your quote above, that second home owners are “high quality” borrowers, so where is the additional risk that they use to justify these extra charges?

        They are also painting another confusing picture. I walked past one of their branches yesterday and saw a prominently displayed poster saying that “we reward loyalty” and will give £300 cashback if someone selects another Nationwide mortgage porduct once their existing deal expires.

        So they want to reward customer loyalty when they feel like and punish it when they don’t!

  24. Perhaps some of us should turn up at the Nationwide AGM on Thursday 22 July, 2010 at Queen Elizabeth II Conference Centre, Broad Sanctuary, Westminster, London SW1P 3EE and ask them why they are doing this. Can speak for up to 5 mins by registering at the Speaking Point Info desk before the meeting. It might be better to ask them face to face – answers may be more difficult for them when they can’t hide behind pen and paper.

    • Sounds like a good idea, Denny. I’m going to think about that to see what we can do.


  25. Hi

    I have contacted the financial ombudsman and also just sent an email to BBC watch dog!

    I am so cross about this. We signed a five year fixed rate 3 years ago – at a hefty rate of interest for the priveledge and now we are unable to sell without penalties. Our mortgage will go up over £100 a month. Yet as public sector workers our pay is now frozen thanks to the exploits of the banking industry!!!!

    I would encourage you all to take 10 mins and email watch dog because unless we kick up a fuss together they will walk all over us.

    p.s. I am not a nutter who writes to watch dog all the time – it is the first time ever – HONEST.

      • Thanks – I just emailed Watchdog – only took a few minutes to do – hopefully if we all do that then they’ll investigate and at least prompt a consistent response from Nationwide!

  26. Nothing more than out and out theft by the Nationwide, money aside its the bare face cheek thats rubbed me up. I can just picture some bright young NW go getter with a power point presentation dreaming this one up with the senior bobble heads in attendance.

    Banks and building societies are doing themselves no long term favors considering the last 24 odd months.

    First economic break in the weather and I’ll be dropping NW.

  27. It’s pretty disgusting. I’m totally gobsmacked that the Nationwide can get away with this. I’m trapped as I can’t change my mortgage, I can’t get back to the UK, no job prospects and have at least another year and half to complete abroad. Nationwide never sold mortgage to let and I never signed any documentation agreeing to one. I signed for a mortgage for my home but had to rent my property(at a loss, through an agency as stipluated by Nationwide, which costs me a fortune), my rent is going up where we live now and financially we will be in a tight situation if the interest rate goes up in the UK. I’m trapped I’ve got no chance of changing my mortgage to another compamy, escalating living costs and little hope of going home anytime soon!

  28. Is NATIONWIDE the Osama Bin Lender of economic terrorism?

    It’s interesting to note that Nationwide’s plunder doesn’t stretch towards our armed service personnel… which makes its decision discriminatory in the economic war that we all face.

    Is it legal?

    Certainly if I had a two/three/five/ ten-year fixed mortgage in place before this decision then I would reasonably assume that the ERC could not be applied – only in those cases where it is pointed out in advance. (It’s called an ‘unreasonable term’. Check with your solicitor.)

  29. just come back from overseas and found this wonderful letter. i have a 10 years ‘fixed’ rate mortgage with nationwide. i am boiling still 6 hours after reading it. surely these people cant be this stupid? i think the path ahead is clear. like someone else said i will be closing my ISA and savings account with NW tomo. morning. i have called them today and was told in a fairly abrupt manner ‘we will be inforcing the charges, there is nothing you can do about it’ charming!!!

    sadly i dont think i can move lender as the penalty charges will be huge, i have asked them to provide the amount of these charges and if i can find a deal elsewhere i am off.

    doesnt matter the board of directors are probably all in south africa watching england loose the world cup (again) from a directors box…. i hope they choke on their smoked salmon.

    • You may want to consider whether worth moving despite the penalty clause – as I am doing – as according to my figs (also 10 yr FR mortgage):
      if we wait until December and the property is still let, then over 36 months we would pay £5,760.00 – just in the excess charge. If we remortgage elsewhere and pay the SVR then the difference between what they expect us to pay from December calculates at just over £10,000.00 (over 36 months). Even taking the penalty charge into account (£3,716.00) – we would be better off, at the very least very seriously considering the other options available…
      I also have ISAs and other products of theirs so am looking at those too.

  30. My mortgage deal ends soon and, fortunatelyn, reverts to Nationwide’s SVR – before the new levy.

    Nationwide’s SVR is “guaranteed” to be no higher than +2% above Base Rate (0.5%), which, including the additional 1.5% “mugging” levy. This means that I will be at 4% per month in total.(This means that I can still linger for a while looking for a better deal in the months before the change. And after too… Providing the Base Rate doesn’t rise too far and fast.)

    I think whoever devised this scheme has been very crafty indeed. Admittedly though this does not assist my opinion of Nationwide in the long term; as theBase Rate rises, and by which time I hope to be with another honourable lender. (There will be no redemption penalty whilst on Nationwide’s SVR so I can go when and where I like.)

    Nationwide suggests that it has ‘an increased risk’, but I consider this fallacious. It’s just profiteering. My let-to-buy loan, unlike a buy-to-let, has to be in the form of a repayment loan so any risk has been a steadily decreasing one.

    • Hi John

      I couldn’t agree more that these charges are nothing more than profiteering by Nationwide. As you say, your mortgage risk is actually reducing each month as you are on a repayment mortgage.

      This move by Nationwide seems to have shaken many of their long standing and previously loyal customers. I’ve always thought Nationwide was an “honourable” lender, but this decision paints an altogether different picture.

      If more people like Jason, in the comment above, take action to move their accounts and mortgage away from Nationwide, then maybe the building society would realise the damage it has done to its reputation.


  31. We will see more of these scams in UK. People are too soft here and easily be scammed into the leagl loopholes and made to coughup money for these fat cats. There is no justification for this rise.
    I am moving my mortgage although there is a penalty of £3000 but you can still cut your losses.Look over 3 to 5 years time. The hiked monthly outgoing over 3 to 5 years will makeup for the loss. Do your maths.
    I have cancelled my credit cards with nationwide.
    Together we are stronger. If they can lobby to scam us then we as consumer are more powerful if we are together.
    If we all do it they will have no option, pickup the phone and do it if you can.

  32. Disgusted by Nationwide I can no longer afford to pay this and made this decision to use property as a means of saving.

    Devastated – in addition they told me lies when I took aout my 5 year fixed term and said this wouldnt happen – now they are saying if I want to leave before Feb 2012 they can apply an early repayment redemption. How does this apply when they are changing the terms and conditions.

  33. Will do, Chris.

    On another note part of the argument I formed was that why should I really worry. I can just move the borrowing over to my main property, and borrow at a lower rate than Nationwide offers anyway.

    The only reason why I didn’t in the first place is because I hoped to return to the property and stay with Nationwide – as I have done for fifteen years. I may have to restructure the mortgage repayments from my second lender in order to submit the interest on the further borrowing to the Tax Man but there is surely nothing that prevents me doing this? It’s NATIONWIDE’S LOSS NOT MINE.

    I suggest anyone with aparents who want to move their investment into a different pension plan may also become your lender -bbut at a rate lower then Nationwide. PEOPLE NOT SHEEPLE.

  34. I am also in the position of Tony and extremely angry. The the only reason I took out a 10 year FR mortgage was so we would know exactly howm much should be paid. It might be different if we had a SVR but with a FR mortgage, we are already paying over the odds. I have no intention of subsidising the tenants and will be looking for other options. in the meantime will write to the Chief exe and his email is graham.beale@nationwide.c . Also, apparently following a recent review of the Chesham Building Society’s mortgage terms, the Financial Services Authority has found a number of these terms to be unfair, so maybe we should be looking very closely at NW as the FSA may find these terms unfair also!!

  35. jimh, if you look on their information, you will find that BFO are exempt from the charge. So, I would suggest chatting to them about your situation.

    Like Ianto, we took out a fixed rate and there was no indication that the clause they are referring to would have anything like this coming into play. If there had been any reference, we would not have taken a fixed rate – why else have a fixed rate than for constancy of knowing what is going out?

    I am quite staggered. Like many, we have been with them for years and years. Guess loyalty counts very little now.

    • It’s interesting that those responding here seem like good long term customers who are dutifully paying their mortgages.

      Where is the increased risk of letting property here? After all, that’s the justification used by Nationwide to increase their mortgage rates in this way?

      Nationwide are aiming this profit making at loyal, long term, customers who are soft targets. I hope enough people are upset enough to take their business away from Nationwide, so that the building society finally realises that they have damaged their reputation with the very type of customer that they were previously eager to attract.


      • I was in conversation with an associate the other day, who listened to my complaint about this with a chuckle. He informed me that his company is lining up to “steal” disgruntled customers from Nationwide. In his words:

        “If you have been renting out the property for 3 years or more via Nationwide, and with an unblemished record, we intend to counter Nationwide’s additional letting interest rate with a rate of our own – one that would favour the former borrower. And us as we see customer reliability as a plus factor not a negative.”

        • John, when your associate is ready to launch the product to “steal the disgruntled Nationwide customers”, could you please ask him to contact us so that we can publicise it on this web site.


  36. When I took out my mortgage in 2003, I was also informed by nationwide personnel that any future lettings would come at no extra cost. Being in the armed forces, I don’t get to choose where I work and I therefore had to balance the need to get on the ladder with the possibility of a long distance or even overseas posting.

    I’m pretty disgusted with them and I’m sure their lawyers have been through this with a fine tooth comb, but it doesn’t make it right. Does any of this come under the mis-selling umbrella? I obviously don’t have any proof of the conversation.

    In the short term, I’ll be closing my current and internet accounts – I’m sure they won’t lose any sleep over this, but until I get some better advice, it”ll beat stamping my feet.

  37. As other have said, pure deceit. We were specifically told at a Nationwide branch, when being offered a new fixed rate last year that Nationwide do not charge loadings for lettings. (We were existing customers.) We are locked in on a fixed rate that is higher than Nationwide SVR anyway. If we want to remortgage we’ll be penalised and we’re going to be penalised anyway.

    Still they’ve got to pay for sponsoring England and the cost of Lucas & Walliams doing the adverts somehow!

  38. Hi guys, the Nationwide hike is sheer profiteering. Suggest u follow my lead by emailing a complaint direct to Nationwides Chief Exec, Mr Graham Beale demanding an explanation. A google search will bring up his email address.

  39. What happens if you are on a fixed term, you asked nationwide’s permission to let the property and you can’t find anything in the small print about being allowed to put up rates?

    • The thing is, the letter from Nationwide states that ‘an additional letting interest rate’ will be applied. So it is the interest rate that is changing. Well I am halfway through a 3 year fixed term and according to an ex-bank manager who had a look at this letter and through my contract simply said “They can’t do this”.
      I have decided to write to the bank to give them an opportunity to explain themselves and if I am not satisfied, I will go to the Financial Ombudsman Service to take this matter further.
      Come on guys, lets make a stand!!

        • Hi,
          As mentioned in my previous post, I sent a letter to Nationwide complaining and giving them a chance to explain themselves. They responded very promptly (within 3 days) and their letter explains things more clearly and actually helps me out in terms of my immediate situation. However, will not help everybody.

          They explained that when NW give permission to let, this lasts for 3 years. They claim that our 3 years is up and we need to reapply for permission (that did surprise me as we asked for permission when we remortgaged 2 years ago). However this is a good thing for us because if we apply for another 3 years permission now (before the new charges take effect) then we will be granted it on our existing terms which is at no additional cost.
          Of course assuming we still let our house out from June 2013, then this 1.5% charge would apply when we seek permisison to let then, but by then we would have had a chance to shop about for another deal or sell the property.
          What they did not explain is how they can actually change the terms and conditions of a fixed term contract when it clearly states that the interest rate will be fixed for a certain period of time.
          I cant see how they can do this and would certainly encourage people to go down the complaints procedure if they deem this appropriate.
          I would just like to highlight something I saw on the Nationwide website:
          “Why choose Nationwide? Transparent charges, so you will always know what you are being charged and when.”
          That’s not really the case now is it?!
          Best of luck.

          • Many thanks for posting that reply from Nationwide, RKY4.

            So those who can reapply before the new charges take effect December will be exempt from the charge for a further three years!!

          • Hi RK4 I’m in the same position and panicking a bit now – any chance I could see your letter of complaint?

  40. Unbelievable action by Nationwide, we have a ten year fixed rate mortgage and two and half years ago had to go abroad for work renting out our only home.At the time of renting we informed Nationwide and they told us it was OK as long as we took out extra insurance which we did, only cost to them a couple of letters. During the last few years we have been paying the higher rate of interest as the rates have plummeted giving Nationwide a good profit on our Mortgage. Now they have the nerve to write to us giving us notice that they have changed the terms of our contract requiring us to pay an additional 1.5% on what should have been a fixed rate mortgage. What is the point of a fixed rate contract!
    We are like many, not making an income on our UK home but simply trying to pay the mortgage until the house prices improve and we can at least recoup our investment. Surely this move by Nationwide cannot be legal,should we not be getting together to initiate a class action against them?

    • I’m not a lawyer, but I’d be surprised if a class action against Nationwide would work.

      They have been clever in seperating out the interest rates and other charges from their terms and conditions so they seem free to change these whenever they want.

      If any lawyers know differently, then please chip in here…

      It seems to me that Nationwide has its borrowers affected by this decision over a barrel, and they know it.

      So what can unhappy customers do (if legal action is not a viable option)? I think taking away as much business from Nationwide as possible is probably the only reasonable action. Close saving accounts, ISA’s any other account, as long as you do not lose interest or receive any penalties.

      There is plenty of competition out there and other financial institutions eager for your business.


  41. I an an expatriate who bought for residence 10 years ago and later had to move abroad and let my UK property. Nationwide seem to have me over a barrel as it’s very difficult to switch lenders if you’re not a UK resident. I thought Nationwide was supposed to be a nice building society not a ruthless bank. Bastards.

    • Tony – couldn’t agree more. I’m in the same position. Expat, need to let because posted overseas. Faultless payer and devout Nationwide customer for years. Now held to ransom. It’s very difficult to change lender whilst overseas, but by God I”ll try when I return during one of my short visits between now and December. What a bunch of idiots to lose loyal customers.

  42. I have a 3 year fixed rate mortgage with the Nationwide on a flat which I now let out. The Nationwide are now going to increase the rate I pay, during the period of the 3 year fix. Exactly the thing that you assume will not happen. So I will be forced to pay the increase in interest rate (taking it from 6.35 to 7.85), or pay a hefty exit charge of nearly £6,000. I feel very let down and angry about this.

  43. I think this change by Nationwide to be bordering on deceitful. I have recently taken out a fixed rate mortgage with Nationwide and my work has now required me to move, so I will have to let out the house. Had I known about this 1.5 % penalty charge I would not have taken out the mortgage with Nationwide. Moreover, as I have a fixed rate mortgage, changing to another provider will be extremely expensive during the next 5 years of the fixed rate term. The rate is also considerably higher than the current variable rate.

    I also think that Nationwide’s claim that they incur additional risk and administrative costs for properties that are let is untrue. The landlord carries additional risk, not Nationwide, and the administrative burden of processing the letting application is a self-imposed process required by Nationwide, not by the person who is paying the mortgage.

    Nationwide might also explain, if this is supposed to be a redistribution of costs to where they should lie, which of its customers have benefited from this change in charges. I suspect none; therefore it is a change to raise more revenue for Nationwide and nothing more.

    • I asked Nationwide in a letter how the other non-letting customers/members would benefit from this levy. Would funds be redistributed to them or would their borrowing rates come down? No, of course not! The justification is totally disingenuous bordering on deceitful.

  44. I agree. I shall look elsewhere for my financial services in the future. I have a ten year record of fautless mortgage repayment to Natiowide. I signed a variable rate mortgage agreement not a variable rate plus 1.5% agreement! The £50 setup charge is also set to recur every 3 years.

    • Thanks, for your comments, Martin. I hadn’t realised that the £50 set up fee was recurring.

      I noticed that Nationwide were emphasising that “Their focus is the customer” in one of their TV adverts. I’m not sure quite what they mean by that, given what they are doing to their long term mortgage customers who are letting out their properties!

    • I was completely outraged when I received a letter from Nationwide advising of this new levy of 1.5%. I entered into a 5 year fixed rate mortgage in 2007 with permission to let. Three hand delivered letters later, and knowing that the CEO has an office in central London right next to my branch, I receive an apology. The Society relied on the fact that I had let the property from 2004-2007 with permission to let for three years and then did not re-apply for this permission until I remortgaged in 2009. They have said that the three year rule of letting would effectively start from 2009 and that I should not have received the letter. Effectively it is my oversight in not following the rules that has let me off the hook. So the 1.5% levy will come into effect in 2012, a few months before my fixed rate ends. I intend to still pursue this with the Ombudsman out of principle and on behalf of others who have followed the rules. In 2012 I shall be ending my 12 years of membership with this once excellent mutual society and taking my business elsewhere.

    • It is now 2012 and I have had a letter from Nationwide ref the 1.5% charges that will be added to all of the borrowing. as we have 3 properties with nationwide but have 3 further advances they are not just putting the 1.5% on the 3 properties they are putting it on all of the borrowing.

      They are just ripping their customers off so they can pay their fat cat bonuses that they have introduced since all of the ex bankers have moved into the Mutual’s and running them like banks and getting their bonus by coming up with ways to rip off their customers. the same ways that the banks did.


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