Nationwide Building Society – Fit For Service?

Ah, we all love Building Societies don’t we? A throw-back to the past when the customer’s needs were paramount, and the happy, smiling faces behind the counter recognised you. A time when the banks didn’t really deal in mortgages so the Building Society was the only place to go when you wanted to buy a house, but they were expecting you because you’d been saving for years with them to get your deposit. Gosh, money was hard to get in those days. Jolly adverts on TV telling us just how safe and reliable Building Societies were.

Since then there has been a major shift. Banks and other institutions have dipped into the mortgage market. Most Building Societies have de-mutualised and many have subsequently been taken over by banks. Service has deteriorated in these ‘new’ Building Societies as the pressure was applied to get more out of the customer.

But, out there still, like a shining light, there was always the Nationwide Building Society. A traditional Building Society, caring for its customers in the traditional way. Hurrah, a light to lead us. Or so I have always thought.

Back in 2008 I bought a house and needed a mortgage. My broker suggested the Nationwide, a 19 year mortgage (sorry sir, we don’t lend beyond your 70th birthday), with the first 10 years fixed at 6.04%, market rate after that. An overpayment of £500 maximum per month was allowed throughout the life of the mortgage. Anything overpayment over £500 in any month would incur a 3% penalty charge. Seemed a good deal. The rate was competitive at the time and fixing for 10 years meant I knew the outgoings wouldn’t go up for a while. The overpayment of £500 would allow me to have the mortgage repaid within 10 years thus avoiding the market rates at the end. It’s also a Building Society, not a bank. I’ll take it.

A couple of months later the banking system collapsed along with mortgage rates. Bank of England rate at 0.5%, people with trackers laughing their heads off. But I was happy enough. My outgoings on the mortgage were constant, about £1500 a month including overpayment.

I took redundancy from work, ploughed that into my mortgage. Took the penalty on the chin and paid that so it wasn’t added to the mortgage. Sold all my shares and put that into the mortgage with my savings, again paid the penalty. I made several overpayments larger than £500 during this period. It was odd but the Nationwide seemed to have two distinct methods of dealing with the penalty. Sometimes they would calculate the penalty of the whole overpayment that month (including my regular £500), sometimes it was only the overpayment over £500 that they charged for. I queried this several times and sometimes got one answer and sometimes the other. No-one really knew.

The Nationwide are very good at taking the money from the direct debit every month. I cannot fault them in their ability to extract the mortgage payment without fail. I had opted to have the term reduce on my mortgage so the base repayment was the same every month and it was great to get a letter from them every month to let me know that the term had been reduced.

As I got closer to the mortgage end I started to wonder what would happen. Would I have to get them removed from the deeds? How would the monthly overpayment work, would they refund the excess? Was there a penalty for early repayment of the mortgage, within the first 10 years there appeared to be?

A quick phone call to the Nationwide Building Society Customer Service Team…I spoke to a chap there, no penalty for early redemption he said because I had been reducing the term and it was now only month’s not years. Their mortgage team would contact the Land Registry and remove the charge against the property. He was a good source of information but the line was chopped suddenly. Oh well. I had some answers.

A week or so later another question popped into my head. Another call to the team. Another chap, and he reassured me about the overpayment, anything overpaid would be repaid into my account, best not to close the direct debit just yet though. No, there wouldn’t be a penalty for early redemption. Great!

I watched the account balance tumble. Just one more payment to go, the regular monthly payment left my account, a few days later the £500 overpayment and my mortgage account was in credit. Hurrah! £69.46 in credit. Ah, but I bet they don’t pay interest on that. Another phone call confirmed that. It’d take 10 working days for them to make the refund. Blast.

I lost access to my Nationwide on-line account. I phoned up. It was because the account was now closed. But the credit was still on the account and would be refunded.

I got a letter from the Land Registry to say the charge on the property was now removed. Later a letter from the Building Society to say my mortgage was closed and excess monies refunded. No figures, just words.

I checked my bank. No payment so I phoned up again. A different person. Ah, yes, they hadn’t started looking at this until 7 days after the mortgage had been paid off. I should get the money within 10 working days. Oh yes, and how will that be paid. Oh, we’ll send a cheque to you solicitor. What solicitor is that I asked. The one who you used to buy the house. The hell you will I said. I was promised a payment into my account and if you send a cheque of mine to any solicitor there will be trouble. Rapid back-tracking I was assured the payment would be to my bank.

A payment did appear. Not for the full amount. £12.91 short. Now that is a small amount I know, but the mortgage calculation is by a mathematical formula and can have only one result, so it seemed odd that suddenly my credit balance had reduced. I phoned again. A nice chap. I explained the problem. He said there shouldn’t be an early redemption charge, so it was odd. Ah, but he could see that my £500 overpayment had been presented twice, the first time it was rejected. He said that what had happened was that the double presentation of the overpayment had caused the system to think I’d paid over the £500 limit for the month…and so the penalty of 3% was charged on the outstanding balance at that time. And the 3% works out at £12.91 and it does. He said he’d send a note to the relevant people. It’d take 10 working days.

Haha, after another 10 working days and no repayment I phone again. A woman this time. Ah yes she said they had made a decision on this 8 days earlier and the penalty payment was correct. Why hadn’t you told me then? We are sorry about that. But I was told that it was a mistake on your part, no mistake, he was wrong and he will be informed of that. How come I get a different answer from the Nationwide each time I call? Don’t you have education so every one knows the products. Seems pretty rubbish to me. But no shifting her, she was adamant the system was right. Is there anything I can do you you? she said. Go jump in the lake I thought, but didn’t say it. Politely I said Yes, loads, but we’ll talk about that another day. Not sure who rang off first.

So, the Nationwide are great at running your mortgage so long as you don’t do anything like make more that the allowed overpayment or pay it off before the term. Once they start having to think for themselves instead of relying on the system you can get any result. I was lucky just briefly when I spoke to one chap, but he has been overruled by some fool elsewhere relying on the system. In fact the silly girl I spoke to last said it was due to early repayment of the mortgage, but a charge of £12.91 on a mortgage in excess of £130,000 being repaid inside 5 years. That can’t be right.

I shall try to call them again now…

Persistence has paid off…Through to someone who understands the problem and has spoken to the redemptions team. We are all seeing the same numbers now…and I hope to have a payment of £12.91 coming back to me.

I do wonder though just what happens to people who aren’t financially savvy or persistent…

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