Intelligent Finance Customers Face Changes of Mortgage Terms

Halifax’s online arm - Intelligent Finance – which is popular among borrowers who prefer online banks has recently faced criticism for changing its offset mortgage terms.
Intelligent Finance (IF), which might be called government-backed as it is owned by Halifax – member of Lloyds Banking Group – informed its customers that starting April 2010 they will no longer be able to use IF offset mortgages if they move. This will, evidently, force bank’s borrowers to switch to other lenders who offer better mortgage terms, yet, higher interest rates. IF’s borrowers, who plan to move before April 2010, will be allowed to use their offset mortgages, however, they won’t be able to borrow more money from Intelligent Finance.
Let us remind that this June Lloyds did say that its online bank – Intelligent Finance – will soon concentrate on savings accounts and will stop selling new mortgages. However, the statement did not directly say that bank’s existing customers will be hit by the changes. Most Intelligent Finance customers were attracted to use the bank’s services because they were advertised as “cheap and flexible.”
Of course, Intelligent Finance does not simply “kick out” thousands of borrowers. Rather, the bank offers them to switch to alternative mortgage deals offered by other members of Lloyds Banking Group – Halifax and Scottish Window.
However, few borrowers will be happy to switch to a 3.19% 2-year tracker deal offered by Scottish Windows from a 0.84% tracker previously offered by Intelligent Finance. The customers do not have much choice, though. Those who refuse to switch to Halifax or Scottish Windows and want to remortgage with a cheaper lender will be forced to pay Intelligent Finance early repayment charge, which might reach as much as 4%.
UK mortgage brokers, Mr. Ray Boulger of John Charcol in particular, have already suggested Intelligent Finance might face legal actions launched by borrowers as it is clearly in breach with FSA guidelines on fair treatment of customers.