Mortgage exit fee...

RachieLou_2

Hello, I'm new here so I hope this is in the right place and that someone is able to offer us some advice.

My fiance and I bought our house in July 2005, and upon advice from a morgage advisor, we swapped our Cheltenham and Gloucester mortgage to one from Northern Rock in January 2007. When looking at the exit fees, our advisor was excited about the fact that it was so low, joking with us and asking were we sure we could afford the £3 exit fee.

Turns out we had to pay £3000.

At the time, documents had been signed, and for a young and fairly naive couple, we assumed that it was just tough luck and we added it to the mortgage amount. Now I think that that was unfair and that we were misguided into accepting something that we thought was for the best.

I know that we probably should have said something immediately; is it too late to reclaim any of that money? Indeed is it possible to reclaim any of that money?

Any advice would be gratefully received. Thank you.

opinions4u

Sounds like you need to ask them why they recommended such a deal that forced you in to paying such a large penalty on your existing deal.

It may be that doing so actually made you better off, but I doubt it.

MarkyMarkD

The fee was likely correct and not unfair.

The issue is the advice to switch. Obviously if the adviser gave the advice on the basis of his incorrect understanding of what the ERC was, he was negligent. When he found out the true ERC, he should have re-evaluated his advice and aborted the switch if necessary.

Ask the adviser to demonstrate, in writing, how you have saved money by switching and incurring a £3,000 ERC and if he cannot, demand that he puts you back into the financial position you would be in if he had not mis-advised you.

Alternatively, if C&G did issue documentation with the wrong ERC, then there is potential to ask them to compensate. But as the true fee became known to you before the mortgage was redeemed, all you would possibly get back (IMHO) is any costs you'd incurred at that point in respect of the new mortgage - maybe an application or valuation fee - and not the full £3,000, as you could (and probably should) have changed your mind at this stage.

dunstonh

I have just put in a complaint against a mortgage adviser (from an insurance company) that recommended a remortgage despite a £5000 ERC. As the insurance company are no longer trading for new business I couldnt ask the adviser why before putting the complaint it. There could be a good reason but I couldnt see anything on the paperwork to say why. So, I was left with no choice to complain.

If the adviser is still available, I would ask them what the justification was for you paying £3k. If the justification is sound (i.e. it cost £3k but you saved £5k over the period of the deal making you £2k better off) then you know why. If there is no justification then you should complain and ask for the £3000 plus interest to be refunded.

MarkyMarkD

Yes, but... the amount of compensation due isn't £3,000. It's £3,000 plus the costs of remortgaging LESS any savings achieved. Don't you think?

The idea of compensation isn't to give a windfall gain ... which would likely be the case if any savings achieved are not deducted.