Mortgage Redemption & HUGE Fees

kizzy23_2

I Need some URGENT advice I have just got a buyer for my house and we hope to be completed within 4 weeks as no chain either side. So going to explain this in detail.

The Problem is I remortgaged with Preferred Mortgages in Sept 2007. Borrowed £153,409.00 ask for a settlement fee as we got into difficulties and have decided the only way out of this mess is sell and start again.

They sent me a letter telling me they want the following

Outstanding Balance £167,133.08
Early repayment charge £9,234.83
Final payment £190.00
Interest up to & including redemption date £785.38
Current interest rate 8.44%
Total amount to redeem £177,343,29
Additional daily Rate £38.65 which will be added each day until completion

Please can someone tell me why? We only borrowed £153,409.00 are arrears and charges added onto it. It is an interest only mortgage. I am beside myself with worry. we have a secured loan on the house. The house is only selling for £188,000 and we now don't have enough to cover all this debt and put a deposit on anywhere to rent so within 4 weeks we are homeless & broke & in debt. How do i fight this figure, I just want a little bit of money left so we could rent a home and start again.

Please advice me
Thanks Kizzy23

opinions4u

kizzy23 wrote: »

Please can someone tell me why? We only borrowed £153,409.00 are arrears and charges added onto it

Yes. Where did you think these costs would have gone? Don't forget interest on these charges too - that will also be included.

How do i fight this figure

You could appeal to their better nature and try negotiating. I doubt very much that you'll succeed.

kizzy23_2

Can they legally charge you these huge fees £38.65 a DAY etc. Once the house is sold I am still in serious debt. (this is over a £1000.00 a month)

I can't find anything on my paper work which states these fees. How can i negotiate.

opinions4u

kizzy23 wrote: »

Can they legally charge you these huge fees £38.65 a DAY

I would guess your mortgage monthly payment is around £1,150.

Divide that amount by 30 days in a typical month and you get around £38.65. That amount reflects a day's interest.

Your paperwork will contain the fees and charges within it. The Key Facts document you were given when you took out the mortgage will also contain helpful information.

I think you need to visit CAB for assistance.

Your post suggests that you have been very naive and I would strongly suggest that you don't borrow money again in future.

Sorry.

Cazza

Hi Kizzy,

Yes, they can charge the £38 per day, in fact this is the amount you are paying already! Take your normal monthly payment and divide that by the number of days in the month and you'll find it's not too far off the £38; what they're saying is that in the month you pay off the mortgage, they don't expect you to pay the WHOLE normal monthly payment, just the number of days that you've actually had the mortgage for.

How it works in real life is often a little bit different, so you may end up having your normal direct debit going out, but that is the way it will all balance out when they've finished working out all the details on completion day.

I know it's a lot of money, but it is correct. All the arrears you have built up willl have been added back onto the mortgage, as well as any admin charges you have incurred, and then they will have charged interest on this.

How much do you owe on your secured loan and how far short of paying everything off will you be?

Radiantsoul

opinions4u wrote: »

I would guess your mortgage monthly payment is around £1,150.

Divide that amount by 30 days in a typical month and you get around £38.65. That amount reflects a day's interest.

Your paperwork will contain the fees and charges within it. The Key Facts document you were given when you took out the mortgage will also contain helpful information.

I think you need to visit CAB for assistance.

Your post suggests that you have been very naive and I would strongly suggest that you don't borrow money again in future.

Sorry.

Yup. 8% of £167k is about 13k a year which is about £37 per day.

Cazza

I agree with opinions4U, I do think you need to get some advice on this and I think the CAB will be a good starting point.

Radiantsoul

kizzy23 wrote: »

I Need some URGENT advice I have just got a buyer for my house and we hope to be completed within 4 weeks as no chain either side. So going to explain this in detail.

The Problem is I remortgaged with Preferred Mortgages in Sept 2007. Borrowed £153,409.00 ask for a settlement fee as we got into difficulties and have decided the only way out of this mess is sell and start again.

They sent me a letter telling me they want the following

Outstanding Balance £167,133.08
Early repayment charge £9,234.83
Final payment £190.00
Interest up to & including redemption date £785.38
Current interest rate 8.44%
Total amount to redeem £177,343,29
Additional daily Rate £38.65 which will be added each day until completion

Please can someone tell me why? We only borrowed £153,409.00 are arrears and charges added onto it. It is an interest only mortgage. I am beside myself with worry. we have a secured loan on the house. The house is only selling for £188,000 and we now don't have enough to cover all this debt and put a deposit on anywhere to rent so within 4 weeks we are homeless & broke & in debt. How do i fight this figure, I just want a little bit of money left so we could rent a home and start again.

Please advice me
Thanks Kizzy23

I would get someone to look over your contracts. The mortgage at 8% seems very high, especially as you have a £9k mortgage repayment charge. Normally a high redemption figure means a low starting rate or low fixed rate. However I assume they are a subprime lender. But if the contracts are watertight(and they probably will be) there is not much you can do to fight it. I suppose it might be worth asking if they would knock off £500 as a gesture of good will, but I doubt they will be interested as they have enough equity.

_Andy_

The early repayment charges were detailed in the KFI and mortgage offer you accepted.

Wutang_2

Radiantsoul wrote: »

I would get someone to look over your contracts. The mortgage at 8% seems very high, especially as you have a £9k mortgage repayment charge. Normally a high redemption figure means a low starting rate or low fixed rate. However I assume they are a subprime lender. But if the contracts are watertight(and they probably will be) there is not much you can do to fight it. I suppose it might be worth asking if they would knock off £500 as a gesture of good will, but I doubt they will be interested as they have enough equity.

Helpful assuming - Preferred are/were subprime so why does 8% seem high??

Radiantsoul

Wutang wrote: »

Helpful assuming - Preferred are/were subprime so why does 8% seem high??

I suppose it doesn't for subprime lending. That rate seems to be about 3% more than the average mortgage in 2007 and that is an extra £5k per year in interest payments(with a £9k redemption fee). And even after 20% falls in house prices it appears there is still some equity in the property. Looked at like that you can see how subprime lending was regarded as a profitable business....

I am actually a little confused about the secured loan though? I can't see why they would accept a postponing their interest behind such a punative lending that would surely erode their equity. Unless the secured loan was taken out after the remortgage?