In September last year, I asked my equity release provider, Nationwide, for additional funds to allow me to help my daughter with a house purchase.
I assumed that this would be a straightforward process and was quoted an interest rate of 5.97%.
Due to delays with Nationwide’s valuation of my property, I was alarmed to see that it increased this rate to 6.58%. Is this allowed?
Tim from London
‘Unfortunately rates are time-sensitive’
Simon Dicey, Which? Money expert, says…
While this is unusual, equity release lenders are entitled to alter the original rate offered if the application for extra funds takes a long time.
In your case it took 72 days. However, this time constraint should have been communicated to you clearly when you first made the application.
Nationwide didn’t inform you in writing but instead verbally confirmed this during a telephone call, part of a long conversation that could have been easily overlooked by many people in your situation, particularly if you weren’t taking detailed notes.
It’s surprising the Key Facts document didn’t confirm this to you, but merely stated that ‘the interest rate charged will be based on the rate (or one of the range of rates) which are available for additional borrowing at the time you applied for it’.
This time constraint should have been communicated to you clearly when you first made the application
I understand that your application took longer than expected due to a requirement to see building control documents relating to a wall you had removed. You told me that while you appreciated this was a legitimate cause for delay, there was no written confirmation of the rate being time-sensitive.
As a loyal and satisfied customer of Nationwide for more than four decades, you felt it had a moral obligation to honour the original rate. Unfortunately, Nationwide has stuck to its guns, so you’ve now decided to escalate your case to the Financial Ombudsman Service.
Equity release works differently to mortgages, where once you’ve been pre-approved, the rate is locked for a certain period.
- Find out more: What is equity release? Lifetime mortgages explained
