ALL borrowers whose mortgage is currently on a variable interest rate, which is set or varied at the discretion of the Society's Board, will enjoy the security of knowing that this rate will not rise above a certain level at any time in the future.
The conditions of the cap are:
- The variable rate is guaranteed not to exceed the Bank of England's base rate from time to time by more than a differential of 3% pa (or 3.25% pa if you do not have a Direct Debit discount). For commercial loans the differential will be 4% pa (or 4.25% if you do not have a Direct Debit discount). This differential plus the Bank of England base rate is called the 'variable rate cap'.
If you have a product cap which is lower than this new variable rate cap, then your product cap will apply for the specified period shown in your Offer of Loan and the variable rate cap will apply if and when the specified period ends or if the product cap is removed at any time.
If your variable rate is increased under the terms of your mortgage by an 'interest differential' due to a change in the circumstances relating to your account or your property, (e.g. if you let your own residential property), then the variable rate cap will be set at 3% plus the relevant interest differential pa above the Bank of England's base rate (3.25% plus the relevant interest differential pa if you do not have a Direct Debit discount). For commercial loans the differential will be 4% pa (or 4.25% if you do not have a Direct Debit discount).
- If we need to reduce your interest rate in accordance with this guarantee purely because of a reduction in the Bank of England base rate the change will be made within 30 days of the change in the Bank of England base rate.
- If the Bank of England base rate ceases to exist in the future, the Society will substitute an independently set rate which the Society considers appropriate for this purpose.
- The Society reserves the right to remove this variable rate cap at any time by giving you not less than 30 days' notice in writing of its intention to do so. If at the time the notice is given, the variable rate cap is in force on your product(s), you may, if you wish, redeem your mortgage within 90 days of such notification. If you opt to redeem within this period and you are within a redemption charge period the Society will waive the early redemption fee(s) applicable to your product(s). However, interest up to the end of the month of redemption will still be charged at the Society's variable rate to this product from time to time. The Society will only remove the variable rate cap in exceptional circumstances.
(All references to the Bank of England base rate mean the Bank of England repo rate).
You are reminded that this benefit ONLY applies to variable rate mortgage products where the interest rate is set by the Society's Board. This DOES NOT apply to variable rate loans where the interest rate is governed by external factors (i.e. all Libor-linked and Base Rate Tracker products).