Background
I took out a ‘’Variable Rate Home Loan’’ on an investment property with NIB. I chose NIB as they only had the one rate, the ‘’Home Loan Rate’’, which they gave for both home loans and Investment loans. Most other lenders charged a higher rate on investment mortgages.
In February 2009, I got a letter informing me this loan would now be called an’’ Investment Mortgage’’ and the interest rate applied would be the’ ’Investment Rate’’. NIB explained that they had simply created a new loan name and rate to better reflect the type of product I held with them. They said there were “no other changes to my account” and I didn’t need to do another thing. The SVR at the time was 4.15% for both home loans and investment mortgages.
They omitted the fact that the investment rate was or was shortly going to be 0.75% higher than the home loan rate, as ECB reductions were only being passed on to home loans but not investment loans, which had the result of adding an additional interest payment of €750 annually for each €100K owed.
I think it was April 2009 there was a further ECB reduction of .25% which was passed on to home loans but not investments so;
Apr 2009 to Nov 2011
· Investment rate remained at 4.15%
· Home loan rate reduced to 3.40%
This 0.75% difference remained until November 2011. They then increased their standard variable rate which includes existing investments by 0.20% to 4.35% and increased their home loan rate by 0.95% also to 4.35%, and offered discounts for home loans via their current account packages.
My Argument
I took the mortgage with NIB as they did not charge a higher interest rate on investment mortgages.
My mortgage agreement clearly stated the mortgage was to purchase an investment property; the loan was called a’’ Variable Rate Home Loan’ ’and the rate of interest applied would be the ‘’Home Loan rate’’. This is what I was entitled to get, not some new rate they invented at a future date.
As a result of my mortgage being changed to an’’ Investment Mortgage’’ I now had to pay the higher investment rate.
What I wanted
I wanted this mortgage to return to being a ‘’Variable Rate Home Loan’’ at the ‘’ Home Loan Rate’’ as per the mortgage agreement signed by both parties.
How I went about it
I followed NIB’s complaint procedure with the above argument, first with my branch to no avail, then with their complaints department in head office, who investigated and replied that, as this was an investment property, they had changed the name of the account accordingly and did not intend changing it back. On the interest rate, they said that when this mortgage was taken out, the variable rate I got was the only reference rate available at that time, they had since introduced a new investment rate and, as this is an investment property, this is the rate that would now apply to my mortgage. They said they could not apply the’’ Home Loan Rate’’ as this was now only available to borrowers in respect of their principal private residence.
The fact that the mortgage agreement signed by both parties clearly stated this was a ‘’Variable Rate Home Loan’’ and the interest rate would be the ‘’Home Loan Rate’’ was ignored.
They confirmed the bank’s internal complaints procedure had now been exhausted. (Final Response)
Going to the Ombudsman
Totally dissatisfied with NIB’s stance, I phoned the Ombudsman’s office. Understandably, they would not discuss or give an opinion on my case, but had no problem explaining the process or answering my many questions. They offered to post out the complaint form or advised that I could download it, and said I could fill it out, photocopy my mortgage agreement, final response letter and any other relevant documents and send the lot in, which I did.
The Ombudsman replied offering as a first step mediation, advising nothing would be binding unless both parties agreed to the outcome. I felt I was entitled to the home loan rate, there was no middle ground, so I declined mediation. This was acknowledged by the Ombudsman and this complaint proceeded to investigation and adjudication.
The first step was that the Ombudsman sent a copy of my complaint to NIB, along with a number of questions. These questions and NIB’s responses were copied to me. At this stage the Ombudsman advised that, If I wished, I could make a further submission arising from my consideration of NIB’s responses, which in turn would be copied to NIB and they would be given the opportunity to respond. I responded to the NIB submission, reiterating my argument.
That completed the investigation process. The Ombudsman then looked at all the information and issued his finding, which was:
“The complaint is upheld, The Complainants are entitled to have their mortgage interest calculated in accordance with the Respondents Home Loan Rate, and I direct the bank to do so.”
Apart from myself, two others made identical complaints in 2009. The Ombudsman has summarised our cases and his Finding is on page 12 of the Financial [broken link removed]; Reproduced in full in the next post
Effort & Costs to take this case
A few hours in total pulling everything together, writing letters, filling out the form and a few phone calls; financially - postage and photocopying, probably less than €5.
Opinion
I and others won our battles, but without doubt NIB won the war, as the fact that only 3 complaints were made in 2009 on this issue would suggest the vast majority simply accepted these changes. I would recommend to anyone dissatisfied with their bank’s decision, not to be intimidated by, or accept their bank’s word: banks are often wrong. I would encourage others to complain - once you set the ball in motion the whole process is surprisingly easy even if you have to go as far as the Ombudsman, whose office was at all times courteous, professional, helpful and very amenable to “Joe Soap” making a complaint.
Making a complaint and the complaint procedure can be found on the Ombudsman’s website; http://www.financialombudsman.ie/
The full thread of my case and a few other successful cases is here; http://www.askaboutmoney.com/showthread.php?t=104951
I took out a ‘’Variable Rate Home Loan’’ on an investment property with NIB. I chose NIB as they only had the one rate, the ‘’Home Loan Rate’’, which they gave for both home loans and Investment loans. Most other lenders charged a higher rate on investment mortgages.
In February 2009, I got a letter informing me this loan would now be called an’’ Investment Mortgage’’ and the interest rate applied would be the’ ’Investment Rate’’. NIB explained that they had simply created a new loan name and rate to better reflect the type of product I held with them. They said there were “no other changes to my account” and I didn’t need to do another thing. The SVR at the time was 4.15% for both home loans and investment mortgages.
They omitted the fact that the investment rate was or was shortly going to be 0.75% higher than the home loan rate, as ECB reductions were only being passed on to home loans but not investment loans, which had the result of adding an additional interest payment of €750 annually for each €100K owed.
I think it was April 2009 there was a further ECB reduction of .25% which was passed on to home loans but not investments so;
Apr 2009 to Nov 2011
· Investment rate remained at 4.15%
· Home loan rate reduced to 3.40%
This 0.75% difference remained until November 2011. They then increased their standard variable rate which includes existing investments by 0.20% to 4.35% and increased their home loan rate by 0.95% also to 4.35%, and offered discounts for home loans via their current account packages.
My Argument
I took the mortgage with NIB as they did not charge a higher interest rate on investment mortgages.
My mortgage agreement clearly stated the mortgage was to purchase an investment property; the loan was called a’’ Variable Rate Home Loan’ ’and the rate of interest applied would be the ‘’Home Loan rate’’. This is what I was entitled to get, not some new rate they invented at a future date.
As a result of my mortgage being changed to an’’ Investment Mortgage’’ I now had to pay the higher investment rate.
What I wanted
I wanted this mortgage to return to being a ‘’Variable Rate Home Loan’’ at the ‘’ Home Loan Rate’’ as per the mortgage agreement signed by both parties.
How I went about it
I followed NIB’s complaint procedure with the above argument, first with my branch to no avail, then with their complaints department in head office, who investigated and replied that, as this was an investment property, they had changed the name of the account accordingly and did not intend changing it back. On the interest rate, they said that when this mortgage was taken out, the variable rate I got was the only reference rate available at that time, they had since introduced a new investment rate and, as this is an investment property, this is the rate that would now apply to my mortgage. They said they could not apply the’’ Home Loan Rate’’ as this was now only available to borrowers in respect of their principal private residence.
The fact that the mortgage agreement signed by both parties clearly stated this was a ‘’Variable Rate Home Loan’’ and the interest rate would be the ‘’Home Loan Rate’’ was ignored.
They confirmed the bank’s internal complaints procedure had now been exhausted. (Final Response)
Going to the Ombudsman
Totally dissatisfied with NIB’s stance, I phoned the Ombudsman’s office. Understandably, they would not discuss or give an opinion on my case, but had no problem explaining the process or answering my many questions. They offered to post out the complaint form or advised that I could download it, and said I could fill it out, photocopy my mortgage agreement, final response letter and any other relevant documents and send the lot in, which I did.
The Ombudsman replied offering as a first step mediation, advising nothing would be binding unless both parties agreed to the outcome. I felt I was entitled to the home loan rate, there was no middle ground, so I declined mediation. This was acknowledged by the Ombudsman and this complaint proceeded to investigation and adjudication.
The first step was that the Ombudsman sent a copy of my complaint to NIB, along with a number of questions. These questions and NIB’s responses were copied to me. At this stage the Ombudsman advised that, If I wished, I could make a further submission arising from my consideration of NIB’s responses, which in turn would be copied to NIB and they would be given the opportunity to respond. I responded to the NIB submission, reiterating my argument.
That completed the investigation process. The Ombudsman then looked at all the information and issued his finding, which was:
“The complaint is upheld, The Complainants are entitled to have their mortgage interest calculated in accordance with the Respondents Home Loan Rate, and I direct the bank to do so.”
Apart from myself, two others made identical complaints in 2009. The Ombudsman has summarised our cases and his Finding is on page 12 of the Financial [broken link removed]; Reproduced in full in the next post
Effort & Costs to take this case
A few hours in total pulling everything together, writing letters, filling out the form and a few phone calls; financially - postage and photocopying, probably less than €5.
Opinion
I and others won our battles, but without doubt NIB won the war, as the fact that only 3 complaints were made in 2009 on this issue would suggest the vast majority simply accepted these changes. I would recommend to anyone dissatisfied with their bank’s decision, not to be intimidated by, or accept their bank’s word: banks are often wrong. I would encourage others to complain - once you set the ball in motion the whole process is surprisingly easy even if you have to go as far as the Ombudsman, whose office was at all times courteous, professional, helpful and very amenable to “Joe Soap” making a complaint.
Making a complaint and the complaint procedure can be found on the Ombudsman’s website; http://www.financialombudsman.ie/
The full thread of my case and a few other successful cases is here; http://www.askaboutmoney.com/showthread.php?t=104951