Northern Rock mortgage customers may find themselves unable to take advantage of the flexible features their loans offer after the bank tightened its lending criteria.
But, during the past week, the nationalised bank has tightened its lending criteria to ensure it does not advance money to people who may struggle to repay it in the current economic climate.
As a result, people looking to borrow back money they have previously overpaid have to answer a series of questions about their income and their outgoings.
Northern Rock’s response
The bank said borrowing the money back had never been a right and had always been at its discretion.
It added that while it had tightened its lending criteria, it had not changed the terms and conditions of the loans, and as a result it did not need to contact customers to warn them that they may find it more difficult to access money they had overpaid.
The move is likely to be a blow to customers, many of whom are likely to have been attracted to Northern Rock’s deals because of their flexibility, but who may now not be able to get back money they had overpaid.
Mortgage brokers said the ability to overpay loans and then borrow the money back had been particularly popular with high net worth individuals looking to repay their mortgages ahead of schedule.
A Northern Rock spokesman said: ‘It is clear in the mortgage offer that it is not an automatic entitlement to do that (re-draw money), it is subject to Northern Rock approval.
‘We are asking for more details from customers when they ask for a re-draw to ensure it is appropriate.’
Find the best mortgage for your needs using the Which? mortgage finder and see if you could save money by moving your home loan to another lender.
© Press Association 2009
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