Admin Fee or Exit Penalty?

Crispy_W · 6 March 2006 at 10:18PM

I have recently switched my mortgage from Halifax to Nationwide at the end of a three year fixed rate deal.

At the outset of the arrangement, the admin charge for early repayment was quoted as £75. Now, three years later it is £175, an increase of 130%

I am in the process of arguing that this charge in no way reflects any increase in costs, but is in fact an exit penalty.

I understand that the Halifax have to make a profit, and I actually have no problem with exit penalties provided they are agreed up front and described as such, but I don't like them being disguised as admin charges.

Does anybody else have experiance of this practice, and were you able to argue your case so that the lender backed down. If so please let me know. If I have any sucess I will make my letters available to anyone else in a similar situation

WiseInvestor_2 · 6 March 2006 at 10:25PM

The lender is required to notify you of any changes in the costs of your loan. Check the letters you've received to see whether they've complied. I queried increased charges by Halifax about 6 months ago and they were able to tell me the exact dates of the letters they'd sent

regularsaver1 · 6 March 2006 at 10:26PM

Nationwide now charge £95 - thats increased

Halifax can argue that it was in your last mortgage statement

Ian_W · 6 March 2006 at 11:29PM

Crispy,
Check out this thread:
http://forums.moneysavingexpert.com/showthread.html?t=100358&page=1&highlight=admin+charges

It's about A&L's exit charge [the highest in play AFAIK] but you'll see plenty of other lenders have caved in when challenged. Towards the end there are some specimen letters which are helpful. You may have to write 2 or 3 times and ask them for a deadlock letter to allow you to take it to the FOS but I'd be pretty sure you'll get the charge reduced if you persevere.

One poster who works for a lender makes the point that it costs the co about £300 if you go to the FOS, so effectively it's a bit of blackmail as it's cheaper for them to reduce the charge than fight it.

However, how can co's claim it's fair, even if they have notified you? If you're in an ERC type deal you can't leave early without even bigger penalties, sometimes running into thousands. There was a recent post about unfair contract conditions and the way firms increase these exit penalties whilst you're tied into a deal by early repayment penalties sails very, very close to the wind IMO.

pingu · 7 March 2006 at 3:26PM

i will be leaving abbey soon

when i took the tracker mortgage 2 years ago there was no mention of (i can't see anywhere) redemption fee £225!!!

but they want that now! it is mentioned in their new leaflet about all the charges!

halifax only charged £75 when i moved to abbey!

Crispy_W · 2 April 2006 at 6:53PM

I appear to have got a result!

Halifax have wriiten offering a full refund of the £175 administration fee. This is a double bonus as I stated in my correspondence to them that I was happy with £75 as originally stated, it was the increase in three years that I considered unreasonable, and would be interested to know how the F.S.A. viewed it.

The settlement letter from them stated that they believed the fee to be justifiable but because of the poor service we received during our time with the Halifax, they considered it appropriate to waive the charges.

I will wait until the money is in my bank before celebrating too much, but Iwill make my letters available to anyone who wants to pursue the same argument

Admin Fee or Exit Penalty?

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