Bank eases mortgage hikes policy

Bank of IrelandThe Bank of Ireland (BOI) has partially backtracked on a steep rise in mortgage rates for customers who thought their repayments were fixed for life.

It has written to 1,200 of the 13,500 homeowners facing sharp increases - despite taking out tracker deals linked to the historically-low Bank of England base rate - to tell them they will no longer be applied in their cases. The bank said the Financial Conduct Authority (FCA) was "supportive of our approach in excluding these customers".
%VIRTUAL-SkimlinksPromo%Customers were told of the decision to raise their rates - which in some case would double, lifting payments by hundreds of pounds a month - earlier this year. Many had taken out loans with BOI subsidiary Bristol & West. The changes came into effect this month.

But consumer group Which? said it believed they were being treated unfairly, pointing out that some were sold a "lifetime tracker". It urged customers to complain and called on the FCA to ensure better communication from banks about clauses in mortgages.
On Tuesday, the bank announced that it had identified and written to two groups of customers "where we will not be applying the increase to their base rate tracker mortgage". These included 1,000 homeowners who were using flexible facilities on their mortgage account and "received a specific administrative letter linked to their transactions that might have caused some customers to believe the differential was for the term of their mortgage".

The second group of around 200 customers were those who had switched their mortgage to a base rate tracker. The bank said they received documentation saying rates could change but their mortgage conditions did not detail the circumstances under which this would happen.

Des Crowley, chief executive of Bank of Ireland UK, said: "We have said from the outset that we will review all customer complaints individually and that we are committed to treating customers fairly throughout the process. It is on this basis that we have removed these customers."

But the move still leaves more than 12,000 customers with a steep rate hike - having believed they would stay low because they were linked to the Bank of England rate, currently 0.5%. BOI has told them it was changing the "differential" it applies to the tracker rate.

A typical change has seen a buy-to-let mortgage holder previously on a rate of 2.25% - made up of the base rate plus 1.75% - rise to 4.99%, representing the Bank rate plus 4.49%. For residential customers, changes will be introduced in two stages. From this month, they will pay the Bank rate plus 2.49%. On October 1, it goes up to Bank rate plus 3.99% - currently 4.49%.

BOI blamed the rise on increased funding costs and the need for banks to maintain greater levels of capital. It has set up a phone line for anyone worried about the impact of the changes. It said customers were free to move to other providers and that no early repayment charges would apply. Most of those affected had buy-to-let loans.

10 top ways to add value to your home
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Bank eases mortgage hikes policy

Of course with all these things, the value it adds depends on the property you have to start with, and the kinds of improvements you make, but Which? estimates the cost of a new kitchen at £8,000 and HSBC calculates the added value to your property at £4,500 - which is a clear loss.

This has been done by 41% of people in the last three years, and 29% of people plan it in the next three. It's cheaper than a kitchen, and Which? estimates the cost at £3,000. This is roughly the same value that HSBC says it will add to your property - so you'll break-even.

It may be difficult, but getting your property ready for sale means depersonalising it. 

Clutter can distract viewers and more than half (60%) of the property valuers who took part in the 2012 HSBC Home Improvement Survey said that the number one way to increase a property's chance of selling quickly, and for a good price, was to de-clutter.

This has been installed by 31% of us in the last three years, and 15% plan it in the next three. Installing central heating is a disruptive job, and according to WhatPrice it will cost you around £3,235. However, this is the first of the top ten to actually pay off. Property expert Phil Spencer says it will add £5,000 to the value.

A quick splash of paint can work wonders on tired-looking walls, and sticking to neutral tones is the safest bet.

Keeping the colour scheme simple, fresh and inviting will help potential buyers to see themselves living in your home.

Some 18% have added one in the last three years, and 30% will in the next three. This is another huge job, but with more people struggling to move and deciding to improve instead, it's increasingly popular. The amount it costs will depend on an enormous number of things, from the area you have to work with, to the size of the extension. However, assuming you add a single room you could spend around £20,000. HSBC estimates it will add around £15,500 to the value of the property, so you are unlikely to gain as much as you spend.

According to Halifax valuers, loft conversions - which require lofts with a roof height of at least 2.4 metres - are a good way to increase the potential sale price of your home.

Be sure to stick to your budget, though. The average loft conversion will cost between £10,000 and £30,000, while HSBC's figures show that they typically add £20,876 to the value of a property.

Putting in new windows adds around £5,265 to the value of the average property and can reap big rewards when it comes to energy efficiency.

It is, however, sensible to ensure that your new windows are in line with the style of your property to maximise the added value - particularly as putting them in can set you back about £5,000.

Off road parking or a garage can be especially advantageous in areas where parked cars line both sides on the street.

Nationwide's figures show that adding a garage, which can cost anything between £8,000 and £25,000, can increase the value of your property by 11%.

Outside space is just as important as inside - especially when people are seeing your home for the first time.

While 63% of the HSBC survey expert respondents said that repainting or varnishing a front door would make a difference, only 23% of homeowners recognised this. Peter Dockar at HSBC said: "It is often the smaller jobs like painting the front door that can make all the difference when looking for a sale."
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