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This appeal concerns the proper construction of the contractual documentation relating to a "buy to let" interest only mortgage provided to the appellant, Mr Alexander ("the Borrower"), by the respondent, West Bromwich Mortgage Company Ltd ("the Lender").
The mortgage offer stated that the term of the mortgage would be 25 years, that the interest rate would be fixed at 6.29% until 30 June 2010 and that thereafter it would be at a variable rate of 1.99% above the Bank of England Base Rate. This type of mortgage is commonly known as a "tracker" mortgage.
The Lender's Mortgage Conditions state that the rate of interest specified in the mortgage offer (other than a fixed rate) may be varied by the Lender. They also state that the loan may be repayable in full on the giving of one month's notice by the Lender.
The Borrower contends that these Conditions are inconsistent with the terms of the mortgage offer and are accordingly not incorporated into the contract. The Judge held that they were not inconsistent, were incorporated and so could be relied upon by the Lender. The Borrower appeals against that decision.
Issue 1 - Was clause 5 of the Mortgage Conditions a term of the mortgage contract?
"For all these reasons, in my judgment clause 5 is inconsistent with the Product Description and the method of rate variation set out in specially agreed Box 4 in the Offer Document and is accordingly not incorporated. "
Issue 2 - Was the first bullet point of clause 14 of the Mortgage Conditions a term of the mortgage contract and/or, if so, did it permit the Lender to require the Borrower to repay the Loan in full together with any accrued interest and unpaid Charges merely by giving one month's notice, and absent any default by the Borrower?
Appeal Allowed on both issues.
This appeal concerns the proper construction of the contractual documentation relating to a "buy to let" interest only mortgage provided to the appellant, Mr Alexander ("the Borrower"), by the respondent, West Bromwich Mortgage Company Ltd ("the Lender").
The mortgage offer stated that the term of the mortgage would be 25 years, that the interest rate would be fixed at 6.29% until 30 June 2010 and that thereafter it would be at a variable rate of 1.99% above the Bank of England Base Rate. This type of mortgage is commonly known as a "tracker" mortgage.
The Lender's Mortgage Conditions state that the rate of interest specified in the mortgage offer (other than a fixed rate) may be varied by the Lender. They also state that the loan may be repayable in full on the giving of one month's notice by the Lender.
The Borrower contends that these Conditions are inconsistent with the terms of the mortgage offer and are accordingly not incorporated into the contract. The Judge held that they were not inconsistent, were incorporated and so could be relied upon by the Lender. The Borrower appeals against that decision.
Issue 1 - Was clause 5 of the Mortgage Conditions a term of the mortgage contract?
"For all these reasons, in my judgment clause 5 is inconsistent with the Product Description and the method of rate variation set out in specially agreed Box 4 in the Offer Document and is accordingly not incorporated. "
Issue 2 - Was the first bullet point of clause 14 of the Mortgage Conditions a term of the mortgage contract and/or, if so, did it permit the Lender to require the Borrower to repay the Loan in full together with any accrued interest and unpaid Charges merely by giving one month's notice, and absent any default by the Borrower?
Appeal Allowed on both issues.
Comment