Save, make, understand money


BLOG: Why I’ll always read the small print from now on…

Joanna Faith
Written By:
Joanna Faith

“Always read the small print”. I’m sure I’m not the only one who has heard these five words, grinned, nodded, ignored them and signed a contract or document anyway.

It feels like we’re forever signing bits of paper; whether it’s for a mobile phone contract, a car insurance policy, an ISA application, a tenancy agreement – the list just goes on.

But if anything has highlighted to me just how important it is to read the terms and conditions before signing on the dotted the line, it’s the story of the 6,700 buy-to-let customers of the West Bromwich Building Society who were unceremoniously informed this week that their lender was increasing rates on their tracker mortgage.

Yes that’s right, on their tracker mortgage.

West Brom customers aren’t the only ones being penalised. Earlier this year, the Bank of Ireland hiked rates for 13,500 tracker mortgage borrowers.

You may be forgiven for thinking that the whole point of a tracker is repayments only rise and fall when the Bank of England base rate changes. And we all know the Bank rate has been at a record low 0.5% for more than four years.

So, how have lenders got away with it?

Well, apparently the increases are permitted by a specific clause in mortgage contracts, in other words, a ‘get out clause’ in the small print.

West Brom said the move was a “reflection of market conditions and the need for us to carry out our business prudently, efficiently and competitively”.

Private letting expert David Lawrenson said other lenders would be watching the situation: “I have seen get out clauses in small print on other mortgages. It goes to show that borrowers should read the small print very carefully,” he said.

He also said the West Brom’s decision raised questions about the way mortgages were marketed on online comparison sites: “If there are lots of get out clauses, should it be included under a lifetime tracker?”

The buy-to-let industry is largely unregulated and the regulators are refusing to help, according to Mark Alexander, who is leading landlords in a class action against the rate rises.

This story clearly has a lot further to run with many discussions down the line between landlords and lenders.

But the important point is this: if you are buying any type of financial product, always read the small print.

And if you’re unsure or unhappy about any of the wording, it’s worth getting professional advice. Having an expert eye glance over a contract could avoid you getting caught out and could save you thousands down the line.

Joanna Faith is editor of Your Money