C&G Flexible Mortgage repayment admin charge

Gnidlog

I have a C&G flexible mortgage which I've had now for approx the last 7 years.

The reason I chose this mortgage was the ability to make overpayments without charges and limits and that the interest would be calculated as soon as I made the payment. I'm aware that since I took the mortgage out that a lot of other mortgages now offer the same facility but to be honest my mortgage is fairly small (21k) and possibly not worth moving.

Over the lifetime of the mortgage I've been making one off overpayments on the mortgage with the idea that in due course I'll have the thing paid off and so save a bit of money.

I recently made my last overpayment and consequently got a letter in the post about it last night. C&G have charged me a £10 admin charge for making the overpayment - this is the first time this has happened and has annoyed me somewhat.

I took some time off this morning to go into my nearest C&G office to try to get a intelligble reason why this charge had been applied (I did phone the customer help line last night but they were pretty useless and I was told it was an admin charge).

I've been told the following:
a) the admin charge was introduced in May this year for captial repayments.
b) if the money had been treated as an overpayment rather than captial repayment then the charge would not have been leived.

So I'm confused and annoyed:
a) to my mind - and I have asked about this several times, there is no fundamental difference between an overpayment or a captial repayment - its just language. So why should one incur a fee and one not?
b) I had a charge applied that I wasn't told about - I was not told when I made the repayment. I've not recieved a notice in writing about the changes to charges (apparently that should come with my next mortgage pack in November - it is on the website but I've only just read it.)
c) I have a flexible mortgage with a slightly higher interest rate than others that should reflect the flexibility about the product and in particular the ability to make extra payments without charges.

So do I have any recourse at all? I paid the charge in the C&G branch this morning because I'm not prepared to pay interest on it. I'm waiting to hear back from the flexibile mortgage team (whom I'm going to tear a strip off).

Any thoughts would be gratefully received.
Thanks,
John

Toughluck

You have a limit of what you can overpay per annum with C&G. If you have gone over that limit then you will be charged. a flexi mortgage with them may mean flexibility of overpayments but you need to check your paperwork. I worked at C&G head office for many many years and from their systems if an overpayment is made to them and it is outside their remit it is an outmated charge and nothing to do with humans. If you read you text and find out they are wrong then obviously complain.

lisyloo

I think you have reason to complain because you haven't been told about the charge.

I would write a formal complaint.
I'm sure if you are persistant that you have a good chance of getting this back.

2latenow

I found the same thing when I tried to make a capital repayment in June. They say that there was notification of this change in the last annual statement but I can't find this in the stuff they sent me.

I got really naffed off over all this because, like you, I felt it was a charge without being notified. I complained bitterly about this, opened a complaint and C&G subsequently wrote (30/06/08) telling me "this fee is currently under review" and meanwhile they were not going to charge me (by which time I'd relented and left it as an overpayment anyway).

Meanwhile, before C&G told me this, I tried to work out the difference between capital repayment & overpayment -- keeping in mind my mortgage loan from C&G is interest only . The conclusion, after posting here, is that there is no difference because they charge daily interest based on loan balance less any overpayments --- just like an offset mortgage!

The only difference is that for an overpayment they will not adjust your month direct debit, so you will continue to pay the same to C&G each month, but on a lower debt, effectively making small automatic overpayments each month. Whereas if you make a capital repayment, they reduce your direct debit to match the new balance.

In the end, I concluded that as an interest only customer I'm better off making overpayments than capital repayments because
(a) it saves me the £10 and/or arguement with C&G each time
(b) I can afford to continue paying the old direct debit amount & making "auto O/Ps" (plus in the long run, I know this saves me money too)
(c) It might make it easier for me to take a payment holiday should I need it, (by eating into the overpayment), effectively at my current mortage rate (cheaper than a loan) [this is an assumption -- I have no intention to try it unless I really have to]
(d) When I next re-fix, the new fix will be based on my net balance and the direct debit amount re-calculated.

For capital repayment mortgages, I think the difference between an O/P and C/R is important though, but not for int. only.

Hope this all makes sense -- it's difficult to explain !

Gnidlog

Update:

Been phoned back by the mortgage team which is now based in S!!!!horpe.

They have admitted they made a mistake and so I shouldn't have been charged the £10 and I will be refunded.

So I'm only out of pocket for the time/stress and the rather large parking fee for a Leicester city centre car park.

I did double check the situation with the charge regarding capital repayment vs overpayment and was told there should be no charge for an overpayment. Still don't understand why one should attract a charge and one doesn't but then I'm not an economist...

Thanks for the replies.
John

lisyloo

Don't they adjust your direct debit after a capital repyament?
Legally they have to write to you, so I can see some potential justification for an admin charge.
I'm not saying I agree with it.

Gnidlog

2latenow wrote: »

I found the same thing when I tried to make a capital repayment in June. They say that there was notification of this change in the last annual statement but I can't find this in the stuff they sent me.

I had my last statement when I went to the Leicester C&G branch this morning. The guy there said there should have been notification in the last statement but there wasn't.

I get my statements every 6 months - the last one was 6th June 2008 after the capital repayment charge had been brought in.

The backroom mortgage team has been moved from Cheltenham or Gloucs up North and the person I used to deal with has been reassigned department. After speaking to one of the team leaders I got the impression the mortgage team is basically all new and so are still finding their feet so I guess this charge being applied to my account was just a mistake down to teething troubles.