Buy to Let & LettingFinance

Are You Being Overcharged For Your Mortgage?


Today I opened a letter from Skipton Building Society. It informed me of the following:

“Your mortgage offers a fixed interest rate for a set period. This finishes at the end of the month after which you will be charged our buy to let standard variable rate. This is currently 4.95% pa, including the 0.25% discount for paying by direct debit. This means your new interest rate will be 4.95%.

Like many other conservative buy-to-let investors I took out a 5 year fixed buy to let product – well 5 years ago. And like any astute property investor I checked the small print on the mortgage contract – especially the bit about “Understanding the Risks” Now under the “Are you comfortable with the risks” section I have the following:

“The buy to let standard variable rate is guaranteed not to exceed the Bank Of England’s base rate from time to time by more than a differential of 3% pa”

So I was a little confused when I received this letter which informed me I would be paying 4.95%. According to my mortgage contract, the rate I should be paying is Bank of England base rate (currently 0.5%) plus the differential of 3%. That gives a pay rate of 3.5%. So why then was I being charged 4.95% – a whole 1.45% more?

So I called Skipton.

The nice sounding Yorkshire lass named Lisa at the end of the telephone was most helpful. She diligently brought up the letter they had sent me so that she had it on her screen and she also brought up the mortgage contract which I had signed so that she could see the sections which I was querying.

And so I say to her:

“Lisa I’m very confused by this letter you have sent me which says that I am now going to be paying 4.95% when my mortgage contract guarantees I will never pay more than 3% above base rate”

Lisa responds “Yes, I understand, Miss Collett but you see we changed our Standard Variable Rate and we wrote to you in April 2010 to inform you of this”

I reply: “Lisa, I understand that you have written me a letter a year ago that you have changed your SVR, but given that I have a mortgage contract with Skipton which was for a fixed period and then reverted to a Variable rate which  guarantees that I will never pay more than 3% above base rate then I don’t understand what this letter about you changing your SVR has to do with me”

“Well” she replies “We sent you a letter”

I’m getting a little testy now: “Yes, I understand you sent me a letter – but I’m afraid you sending me a letter does not mean that you can change the contractual terms of my mortgage which I signed 5 years ago”

She starts to wobble now…

So I continue…in my testy manner “Did I sign this letter you sent to me saying that I agreed with any new terms and conditions which you are applying to my mortgage contract. Did I have this witnessed by a solicitor?”

She is now faltering…

“No…but, we have informed you. We sent you a letter”

Well” I retort – mightily testy now –  “I can inform you by letter that I am no longer paying the mortgage but I don’t frankly see how how that changes the contract I have with you and that I still owe you money. I don’t think that you’ll agree with a letter like that will you?”

She whimpers…

“Yes I can understand your point Miss Collett”

“So” I say in my most demanding, authoritative but still being polite manner ” I want you to change the rate you are charging me to the correct contractual rate which we agreed 5 years ago and which is in my legally signed contract as witnessed by a solicitor”

“Ahh…well it’s not that simple…let me just go and speak to my manager”


Lisa returns to the phone breathless and all purry voiced like an abandoned kitten desperate to be adopted “So sorry for the delay Miss Collett, my manager and her supervisor have been looking at your case and they have advised that we can’t do anything”

“Excuse me” I bluster, now I’m angry. No more Miss Polite Authority Woman “What do you mean you can’t do anything?! We have a signed legally binding contract from 5 years ago which states the rate I should be paying. Just because you send me a letter does not mean that you can change a legally binding contract…You are aware this is a legally binding contract aren’t you? You are aware that if the shoe was on the other foot I can’t just send you a letter saying that I am going to pay you less each month because I have sent you a letter and you just have to accept that”

Lisa is losing it…I can hear her trembling down the phone…

I realise I’m getting nowhere fast. And Lisa, bless her is trying her best…but she’s out of her depth

“Lisa, I think the best thing for me to do is to lodge this as an official complaint. This can then be dealt with in an appropriate manner. The correct rate as detailed on my legally binding mortgage contract can then be applied and this can all be sorted. Obviously, if the correct rate is not applied then I will be forced to take legal action and involve the Financial Ombudsman”

“I’m very sorry I can’t help you Miss Collett and I do understand all that you have said and I am sorry”

“It’s OK Lisa” I say “But just answer me this – given you are not charging me the correct rate on my mortgage am I right in thinking that now we are in dispute, can I stop paying it until all of this is resolved. Shall I send you a letter to that effect?”

“Oh no Miss Collett, you can’t stop paying your mortgage that would be a breach of the terms and conditions of your mortgage”

To which I replied “Oh you mean like changing the contractual rate which I am meant to be paying…isn’t that a breach of the terms and conditions of my mortgage?”

To Be Continued….



  1. Nick

    Sam – I know it’s extraordinary, but you are probably going to lose. As it’s a BTL mortgage you’ll need to go to the Banking Ombudsman, and there are fewer laws protecting you as you are B2B not a consumer. Things like unfair contract terms won’t protect you, and somewhere in the small print of the contract will be a clause which allows them to change the contract at any time they like, to anything they want. Extraordinary isn’t it?

  2. Nick

    Sam – surprised as a customer you didn’t hear about this before as they did it nearly 2 years ago. There is an action group which you can join for £100 at http://www.leonkaye.co.uk/skiptonbuildingsociety.html

    Of the 64,000 people affected by the Skipton’s change only 100 have joined the group.

    I don’t think the Action Group will help you because it is using the 1977 unfair Contract Terms Act which doesn’t apply to you.

    I have a Skipton Mortgage, but mine is a tracker.

    1. Sam

      Hi, thanks for the link to that group. Unfortunately it’s not looking good. I contacted them and here is the reply I got:

      Thank you for your enquiry.

      At present we have had very little response to our campaign and it is essential to this Action that we have as many of the 64,000 borrowers on our side as possible. Unfortunately we are limited in our ways of contacting these Skipton borrowers as Skipton have refused to provide us with a list of affected parties.

      As you may already know, both the OFT and the FSA have rejected our Complaint against Skipton and the only way forward now would be to take Court Action.
      At the present time, we feel we are not in a position to move forward and cannot contemplate taking a claim against Skipton without further support from borrowers.

      We await further developments in the hope that we can attract further members.

  3. Sue

    I read w interest. I too had heard about this before. Since it is Buy To Let, the lenders appear to be able to behave like it’s the Wild West with no sanction. Look out for the little “and we reserve the right to move any goalposts we want to move, at any time, for reasons of our own which we won’t bother to disclose” clause, since they exist in many mortgages…..

  4. Sam

    Nick thanks for the link I’ll take a look

    Yes Sue it’s crazy isn’t it

    Well despite the gloomy outlook I still feel regardless of this being a B2B arrangement – a contract is a contract. A guarantee is a guarantee.

  5. Nick


    A contract isn’t a contract if it’s with a bank. Banks are in a privileged position, and are regulated by the government. You & I can’t set up a Bank, Banks have to pass tests and satisfy regulators that they won’t go bust. In exchange they receive a monopoly position which sets them above the regulation of the market – they can charge what they like because no one is allowed to compete with lower prices, they can have whatever terms and conditions they like because no one else is allowed to be more reasonable.

    It’s wrong to criticise the Skipton because all the other banks have the same sorts of clauses.

  6. Jonathan

    Hope you are able to get something from them. Having recently had a major argument with my local council about council tax for a flat, I can sympathise. In our case, we were charged for a void period – only about £40, but it should have been nothing. However, they didn’t bother telling us, and the first we knew was a bailiffs letter for over £300.

    Succeeded in the end, but it is scary how organisations in a position of power can break laws (like contract in your case and civil procedure in ours), with seemingly no repercussions.

  7. James

    Nick I really can’t agree with you – why bother having a contract in the first place if one party can’t be held accountable to what they’ve agreed.

    And ‘Banks have to pass tests and satisfy regulators that they won’t go bust’ didn’t really help much when the government had to bail a few out in recent years to keep them afloat.

    Sam I think you should pursue this.

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