Redemption Fee

jrh2254

I have a Britannia Building Society variable rate mortgage with 2 sub accounts. I have been making overpayments on both. One of the sub accounts matures on 15th May of this year and has a current balance outstanding of only £1.50, which I had intended to pay in three monthly payments of £0.50p so avoiding the redemption fee.

Out of the blue I received the following from the Britannia :

"Following a recent review of the above mentioned mortgage account I note you have a small balance outstanding.
Therefore, please find enclosed a redemption statement detailing the amount required to redeem this sub account. As your scheduled term does not expire until the 15th May 2006, a discharge fee of £75 is payable upon redemption.
I trust this information is of assistance to you"

Britannia then attach a mortgage redemption quotation showing that the amount to be repaid on 31 March 2006 is £76.50(£75.00 redemption + £1.50 outstanding mortgage)!!

Does this mean I have to redeem the mortgage circa 6 weeks early and pay £76.50 or can I just pay the £0.50p per month for the next three months!!!

Can Britannia force me to pay the £75 redemption fee?

Would appreciate your comments.

Thanks.

JRH.

stanmoresaver

I would carry on as you intended. As a consumer, i would create merry hell if they tried to force me to close my account 2.5 months early so that they could charge me £75. As long as you are not breaching their T&C's, and i don't know how you could be, stick to your guns!


Good Luck

SS

jrh2254

Thanks SS,
I will do that and see if I get any further pressure from Britannia.

I will let you know.

JRH.

Bossyboots

Won't they still charge a fee though for deeds release and sealing a DS1 to remove the charge from the property?

If this is included in the £75 they want to charge now, I would say it is a bargain as abbey were charging £180 fourteen months and I understand it has gone up now.

If this is just a redemption figure and there will then be extra to pay for the above, then I too would just make small payments until the end of the term. Have you checked though whether there is a clause in your mortgage that once it slips below a certain amount you would be liable for the balance and the redemption figure with immediate effect.

SammyD_2

The redemption fee is payable regardless of whether you pay the mortgage off now or not - it is Britannias charge for arranging to "discharge" the mortgage from your title and to give you back the deeds. It is different from an early repayment charge, and will still be payable if the mortgage runs the full term.

WARNING - many many banks and building societies are putting up the redemption fees - mine charge with the Yorkshire Building Society went from £50 to £199 in less than three years, and some lenders charge even more. (There are lots of posts on this site about this if you are interested). I would pay it now, as £75 is probably one of the lowest in the market.

As for the question of whether you can be forced to pay - well no, but they are not going to discharge the mortgage until it is!

Ian_W

I think some lenders charge a redemption fee, like bossyboots & Sammy D said, whenever you finish your mortgage. Others only charge it if the mortgage doesn't run it's full course. Nationwide fall into the latter group and even waive it, as a reward for loyalty, if your mortgage has less than 10yrs to run when you pay it off.

Can't find out which catagory Britannia fall into from their website, so jrh should check the mortgage T&C's, it may be there is nothing to pay if the mortgage runs it's full course, but there again it may be payable anyway.