'Disaster' as Rock customers lose funding deal
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Northern Rock mortgage customers on a fixed-rate deal no longer have access to a feature that allowed them to borrow additional funds at the same rate during the initial period.
Northern Rock Asset Management, which now controls the majority of Rock’s back book, does not have a banking licence so it cannot lend money.
A Rock spokeswoman says the flexible feature, which allowed borrowers to port their mortgage across to a more expensive property at the same rate, is no longer available.
She says that customers who need to switch borrowers in order to borrow additional funds will be charged penalties, which will vary for individual customers.
London & Country Mortgages technical manager Richard Morea says this will be a “disaster” for some customers.
He says: “For the majority of people, the ability to borrow additional funds at the same rate is nice to have but is not essential. However, this is a disaster for customers for whom this feature was one of the key drivers behind them taking out the mortgage.”
The Rock spokeswoman says: “The feature was available on the entire mortgage range until December 31, 2009. Flexible features are discretionary. That would have been outlined in customers’ KFIs, their offer and the product literature.
“Some flexible features are still available but not ones that offer additional lending.”
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Readers' comments (1)
Derek Frost | 16 Jan 2010 2:46 pm
How on earth has this situation been allowed? What will the situation be for the affected clients? Who will bear liability if a client has no option but to pursue a complaint? Is contract law not applicable?
What a shambles!
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