Redemption penalty - worth pursuing?

MattyNeth

I am moving house now in the 4th year of a 5 year fix with the Halifax. The redemption penalty is £1,640 :-(

When we took the mortgage out we understood the redemption penalties involved, but at the time we could not forsee our future circumstances - we've had 2 children since we took out the mortgage

As a result we really have to move, and looked to take out a larger mortgage with the Halifax. Unfortunately they would not lend us the increase in the mortgage - in fact with our present circumstances they would not lend us more than 75k (our current mortgage is 82k!!!!).

As such we are FORCED to pay them the redemption to move to a lender who will lend us the required money. Is this fair? Can I seek to maybe get some of the redemption penalty waived?

Robert_Sterling_3

If it is consistent with the terms and conditions you agreed to then it is legal. The Halifax is of course a Bank and not a Building Society.

blacksta

You need to understand that t and c have been examined by high lawyers and basically i dont really think you have any leg to stand on. I am sure on the longer run you are better off moving anyway as things will eventually level out.

You have 2 choices 1, Either move or Stay( as you have only one year to go)

dunstonh

....especially as these charges would have been very clear on the mortgage offer letter which you signed to agree to. A solicitor would have confirmed these charges to you before allowing you to sign (unless you did it yourself).

I really think you have no option to pay and its unlikely HBOS will refund any as you are taking business away from them. Not much incentive there.

MarkyMarkD

I don't see why they would consider letting you off. They incur a loss if they let you go as they have borrowed that money themselves at what are now punitive rates.

Don't enter into long-term arrangements if you aren't certain of your plans, is the pure and simple message - it never costs that much extra to buy a mortgage with flexibility.

MarkyMarkD

Robert_Sterling wrote:

If it is consistent with the terms and conditions you agreed to then it is legal. The Halifax is of course a Bank and not a Building Society.

Not sure of the relevance of this, RS1. Building societies are no more likely to let people off than banks, in these circumstances.

JohnG

Hi,
Thought I'd add a further slant on this subject.

We took out a sort of "Economy/Budget" type mortgage thru the Halifax that was reviewed once a year with a new rate set for the following 12 months. We found this great as we didn't have to keep changing it everytime the bank rate changed (Which it did alot back in the eighties and nineties). Then about 10 years ago now, we were told by a FrdsProv advisor that we would get a far better rate if asked Halifax and FProv did this on our behalf. Halifax indeed, came back with a much better rate based on our "Customer Loyalty" status! this lasted for 3 years then it was due to revert back, or so we thought.

Unfortunately for us we were so naive at this time that we didn't look at the rate and locked in period they were putting us back into, we foolishly assumed that we would go back to the Economy/Budget plan but no, we subsequently realised that we were put into a standard rate which we were locked into for 5 years at about 7.5%.
Of course, rates came tumbling down and it wasnt until we thought hang on a minute we are paying significantly higher payments that we saw the HUGE penalties if we wanted to move the mortgage.

We tried in vain to explain to the Halifax about how we didnt realise what we had got ourselves into, believing it could not of been explained properly or at all - they of course, wouldnt budge, we after all had signed the papers so had to swallow a bitter pill.

What we then tried to do was to wait until there was about two years to go when the penalty would be reduced by about a percentage but then, to add insult to injury, because I am now self-employed and my financial accounts are less than impressive compared to the average PAYE employee, they would not allow us to transfer to another type of mortgage, even if we paid the penalty!! In fact they would only give us a significantly smaller amount which was no good to us at all!

So, what ever happened to the "LOYAL CUSTOMER" status they had so kindly given us previously? What about our house that we were sitting on that had increased in value? What about the fact that we had NEVER defaulted on the mortgage payments?

Thank god C&G came to our rescue so that we could escape the grasping clutches of this two faced banking organisation that says one thing then does another once you are signed up to them. Give you a little XTRA?? Charge you A GOOD DEAL XTRA more like.

Sorry had to get that off my chest.....