Abbey Bank points out in the letter to its flexible mortgage customers that if the situation arises they may have three months to pay a lump sum to make up the difference.
A flexible mortgage allows property owners to borrow money up to an agreed limit in stages and pay it back early if they want to. The letter to some customers told them that their credit limit has been reduced.
The letter warned that according to the terms of the mortgage agreement if the value of the property falls so that they owe more than 90% they will be given three months to pay the difference.
The revelation provoked outrage and Abbey hastily put out a statement saying that it had no immediate plans to invoke the clause. But it did not rule out doing so in the future.
The bank has also raised the cost of other mortgages and has introduced new fees for those who change their minds after applying for a mortgage.
The lender, which has sharply boosted its share of the mortgage market this year, has raised the cost of its two-year tracker by 0.25%, despite a steep drop in funding costs and official interest rates.
It previously charged 1.99% over the Bank of England base rate for a two-year tracker for borrowers with a 25%. Now it charges 2.24% over base. The fee to take out the deal has risen from £995 to £1,495.
The rate rise comes despite Libor, the rate paid by lenders on the wholesale markets to fund tracker mortgages, plunging by 50 basis points last week.
It is also clamping down on people shopping around for mortgage deals, introducing a £200 fee on those who change their mind after applying for a mortgage. A growing number of lenders have imposed a booking fee on borrowers who secure a mortgage in advance, and then decide not to take it. However, Abbey's 'pre-completion product change fee' goes a step further, applying to borrowers who want to switch to another Abbey mortgage before the previous deal is complete.
The lender said its new fee covers the costs of processing the mortgage for a second time, and of securing the funds in the first place. However, brokers accused the lender of being opportunistic.
Melanie Bien of Savills Private Finance, the mortgage broker, said: 'Borrowers must watch out for extra fees such as this, which push up the cost of a deal. Given that it can take months between agreeing a loan and completing in this market, pricing on mortgages could have dipped dramatically in the meantime, so you may well want another deal.'
