Are mortgage redemption penalties legal?

Bernard_Coleslaw

andrewc wrote:

Hello and thanks for all of your comments with the exception of the following:

Specific response to dunstonh and his response:

'You have no hope in hell of classing them as illegal'.

Presumably you can support this aggressive statement with case law. No ?
Why doesn't that surprise me.

Your comments re consequences of the contract. I am well aware of the consequences of such a contract. Your points are irrelevant. The legality of a contract's terms determine the parties ability to enforce.

Your generic and dismissive comments do not address the legality of overhanging penalties and the legality of such under certain circumstances. Any party attempting to enforce a contract will offer this immediate response. It is in itself, no defence unless proven. In my case, the lender as refused to provide support for their stance.

To all readers, please note that 'independent financial advisors' are often offering producrs from a very limited range of providers, with whom they have introducer relationships. So much for 'independent' financial advice.

Blimey. Remind me never to post any response to you that you may disagree with......

BC

Ian_W

andrewc wrote: Presumably you can support this aggressive statement with case law. No ?
Why doesn't that surprise me.

Can you? No? Perhaps that's because there has been no "case law" about these penalties to produce. Case law only happens when a party wins a case on a specific point of law in the High Court or above. The terms of most [all I've ever seen, TBH] ERP's are very clearly laid out for those entering into an agreement to remortgage on special terms. If they weren't I'm sure they would be deemed unfair, but that isn't the case on any deal I've ever seen. I would also find it very hard to believe that a court would deem them unfair when known about and freely entered into by both parties.

I certainly think that lenders are sailing VERY close to the wind when they arbitrarily change their redemption fees during the course of a loan where ERPs apply and I do hope that those are challenged in court by someone - but I think lenders realise this and back down when challenged.

BTW if you'd been visiting these forums for more than 5 minutes you'd have known before your rant that dunstonh, whilst an IFA, doesn't do mortgage business. He frequently gives helpful advice on investment issues.

dunstonh

To all readers, please note that 'independent financial advisors' are often offering producrs from a very limited range of providers, with whom they have introducer relationships. So much for 'independent' financial advice.

Your knowledge on how IFAs work is almost as non-existent as your knowledge on mortgages and economics. An advisor with a limited range of providers is called multi-tied. They can get fined or struck off for calling themselves independent as they are not. Rather than attacking others and making completely rubbish statements on a subject you know nothing about, why not stick to your initial subject and discuss that.

If you sign a contract, it is binding. Your only hope of overturning that is if it is an unfair contract. It is difficult to see how current mortgage contracts could be considered unfair. Some years back there were concerns that the contracts were unfair and the tie ins were altered to reflect these views. Now, it is unusual to see a tie in that goes beyond the period of the deal.

If you get a discount rate fo 2% for 3 years, the lender has incurred costs and booked funds to be able to offer that. If your tie in is for three years and you have a 6,4,2% penalty for example, what is wrong with that?

Perhaps you could give us the information on the tie in penalty that has caused you to raise this subject?

andrewc_2

Your derisory comments are irrelevant and pointless.

I refer to your intellectual comment '...No chance in hell...'.
Fits well with the size of your ego.

Independent financial advisers continue to advertise themselves as such even when they are limited to only certain lenders.

Clearly you are using the forum for self promotion or you would not advertise your self as such.

You know nothing of my background in economics or finance.


Ian W:

ERP's are very clearly laid out for those entering into an agreement to remortgage on special terms. If they weren't I'm sure they would be deemed unfair, but that isn't the case on any deal I've ever seen. I would also find it very hard to believe that a court would deem them unfair when known about and freely entered into by both parties.

Of course, there never has been an unfair contract, because the existence of a signed contract immediately validates its legality.
The fact is that case law has been made on the basis of parties entering into unfair contracts. Knowledge of the contract terms by a signing party does not in itself make the contract terms legal.

Perhaps you should stop ranting.

dwsjarcmcd

to Andrew C
Rather than pointless posts, would it not be a good idea for you to test the law since you seem so sure of your ground. No-one is going to agree with the stuff you have been posting. Or do you not think that all these lenders have the wording of their contracts pored over by solicitors before they see the light of day. As I'm sure your aware, not only do the contracts need to be legal but the terms of the loans must comply with TCF.

Ian_W

andrewc wrote: Of course, there never has been an unfair contract, because the existence of a signed contract immediately validates its legality.
The fact is that case law has been made on the basis of parties entering into unfair contracts. Knowledge of the contract terms by a signing party does not in itself make the contract terms legal.

I didn't say it did.

andrewc wrote: Perhaps you should stop ranting.

:rotfl:

kenshaz

andrewc wrote:

Hello,

Does anybody have any information which relates to the legality of mortgage redemption penalties?
These are the fees, usually a % of the original loan, which are charged if the borrower redeems the mortgage during a special offer fixed or discounted rate period.

My opinion is that these fees bare no relation to the actual cost of redemption and therefore may be illegal under the Unfair Contracts Terms legislation.

Any advise of personal experiences would be very helpful.

Thanks, Andrewc[/QUO

The fees are not proportinate to the cost involved,three years ago I asked for a redemption fee and it was £75 earlier tis year it was over £200,they close ranks and I have take this through it stage with Halifax,and it is in contravention of the unfair contract terms

kenshaz

Bernard_Coleslaw wrote:

Blimey. Remind me never to post any response to you that you may disagree with......

BC

Andrewc ,they are closeing ranks on any-one who has an opinoin,do not be discouraged

Ian_W

Ian W wrote in post #13: I certainly think that lenders are sailing VERY close to the wind when they arbitrarily change their redemption fees during the course of a loan where ERPs apply and I do hope that those are challenged in court by someone - but I think lenders realise this and back down when challenged.

kenshaz, the OP is talking about early redemption penalties on fixed or discounted rate deals if you read the thread properly.
We've all got opinions, that's why we post and who is the "they" who are closing ranks?

kenshaz

Ian_W wrote:

kenshaz, the OP is talking about early redemption penalties on fixed or discounted rate deals if you read the thread properly.
We've all got opinions, that's why we post and who is the "they" who are closing ranks?

if the cap fits