5 year term/ 10 year fixed?? please help

arwalder

I am very confused about my mortgage deal, which I have signed to and been paying since 2008
The term of my mortgage is 5 years, however
I have a fixed rate deal lasting 10 years.
In my key facts it states that I will make 60 payments on the fixed rate deal then move to SVR in 2018?
I now want to repay my mortgage but have early redemption fees of over £8000, payable until 2018. Obviously the fees would be lower if I was on a 5 year fixed rate and wanted to pay it off.
I have contacted my mortgage provider and that have admitted that they cannot understand the product and told me to speak to my financial adviser which I shall do on Monday.
Though I have signed to the mortgage I feel I have been sold something totally useless do I have a leg to stand on?
Please help!

MarkyMarkD

You are quite right that the lender cannot do what they have done. I can't understand for a moment why they are fobbing you back to your financial adviser - it is their product, not the adviser's.

It's not particularly obvious that the fees for early repayment would be lower if it was a 5 year than a 10 year fixed rate - with many lenders, the early repayment charges are the same.

You have no case at all for getting out now without an ERC. But I don't see that they could possibly enforce an ERC at the 5 year stage given their documentation error.

arwalder

Thank you for taking the time to reply.

Not sure if this would help my case but......
The early repayment charges are lower on the 5 year fixed rate with my mortgage provider as i have the key facs for this product also. They are around £3000 less. Both products have exactly the same % on the fixed rate deal.

Any feedback on this would be great- If I have a chance I will go into the branch and try and speak to somebody today.

Thanks again.

itsakidsworld

Hi,

you may not get much luck on a Saturday in branch as it is possible no "mortgage adviser" will be available. They normally use Saturdays to attract customers!

Your case sounds very strange and why you would they give you a ten year "tie-in" on a five year deal? Hopefully the mortgage guys on here will appear and clear this up for you. My advice would be only based on ideas and not full knowledge so just a short post to tell you keep focused on this one and good luck.

getmore4less

I think it is up to the advisor to sort this out.
They should have worked out what is best for you.
The lender just provided what was asked for.

I don't see anything wrong with a 10y fix on a 5year term, it gives options to extend the term should you need still knowing yoiu have a long term fixed rate.

Did you know that you may be in a position to redeam early?

As you have the info for both deals it is something you and your advisor should have got right between you.

Simple solution might be to see if they will let you change the term(don't say to what just ask the cost)

When they say yes, make it 3 months, not instant but no penalties and mortgage redeamed.

arwalder

I contacted a mortgage adviser from the Principality today. They still are admitting they do not know how I can have this mortgage!
They are saying it is a matter between myself and the financial adviser (whom I tried to contact today seems as though their number is no longer in use!). All the paperwork regarding the set up is apparently done through the adviser they simply inform the Principality of the product chosen.
All the documentation I have received through the financial adviser is on Principality headed paper- though when I spoke to the mortgage adviser she pretty much told me it was not worth the paper it was written on.
So I then asked for her to send me the terms and conditions of my mortgage- she said she couldn’t. Is the next step the Ombudsman?

Thanks for your post Get More for Less. I was not aware I would be in a position to pay the mortgage off. I still can’t understand the term of the mortgage (neither can the Principality) being only 5 and the fixed deal for 10. Surely once the mortgage term has ended they have the right to withdraw all products from sale how could they extend the fixed rate for another 5 years? Is this normal practice I have not come across any deal like this on the market today?

MarkyMarkD

I don't agree with getmore4less at all.

You CANNOT have a mortgage term with a fixed rate period (and ERCs) greater than the term, because the mortgage conditions will impose the ERC if you redeem at the end of the contractual term and that makes no sense.

Lenders are not going to give loans with a longer fixed rate and a shorter term, just to give you the option of extending the term. That is a silly deal for them to get into.

arw - how on earth did you not notice this substantive error when you accepted the mortgage offer?

There is no point at all getting the Ombudsman involved at this stage, as nothing has happened which is worth claiming. If you indeed wish to redeem, you would have to pay the ERC (as demanded) and then complain about it to the Principality, and then go to the FOS if they refuse to do what you believe is fair.

But I'm still not sure what YOU think is fair - are you happy to pay the ERC which would have applied on the 5 year term? In which case, why did you accept a deal with ERCs twice as high?

arwalder

I know this is an embarrassingly massive error on my behalf even signing to this mortgage.
I am happy to pay the ERC’s at the 5 year fixed rate because from what I can see that is essentially the mortgage I have. I am only perusing this as I think the product I have been sold is worthless. I also understand that I have signed to this and this will dramatically affect my chances of any positive resolution. Thanks for the continued help on this!

getmore4less

MarkyMarkD wrote: »

I don't agree with getmore4less at all.

You CANNOT have a mortgage term with a fixed rate period (and ERCs) greater than the term, because the mortgage conditions will impose the ERC if you redeem at the end of the contractual term and that makes no sense.

Many ERC are a % of the amount paid off at the time of redemtion.

So Zero ERC there is nothing outstanding.

Mrs_Bumble

arwalder wrote: »

I am very confused about my mortgage deal, which I have signed to and been paying since 2008
The term of my mortgage is 5 years, however
I have a fixed rate deal lasting 10 years.
In my key facts it states that I will make 60 payments on the fixed rate deal then move to SVR in 2018?
I now want to repay my mortgage but have early redemption fees of over £8000, payable until 2018. Obviously the fees would be lower if I was on a 5 year fixed rate and wanted to pay it off.
I have contacted my mortgage provider and that have admitted that they cannot understand the product and told me to speak to my financial adviser which I shall do on Monday.
Though I have signed to the mortgage I feel I have been sold something totally useless do I have a leg to stand on?
Please help!

Are you advising that the term of your mortgage in 2008 was 5 years and you intended to have repaid in full your mortgage in 2013?

You advise in your post that your KFI states that you make 60 payments on the fixed rate and then reverts to the SVR in 2018 - this statement doesn't make sense as 60 payments divided by 12 = 5 years and so I would have thought that it is a 5 year fixed rate product? Does the litereature actually say that the product will revert to the SVR until 2018?

So if I am understanding this I would have thought that at the time you arranged the new mortgage product you understood that the mortgage was set to run for only 5 years but the term of the mortgage sounds like it was set up for 10 years, not a 10 year fixed rate product? Is that correct?

Check on the KFI/Offer how long the actual early repayment charges apply for as this should indicate how long the actual product runs for.

So if it is a case that you thought that the term of the actual mortgage was 5 years you can ask your lender to reset the term to 5 years and just pay the increased monthly payments.

Contact the adviser and recheck what the understanding was by both of you as to how long the actual mortgage term should have been, check also the suitability letter that was issued to you at the time by the adviser because there may be details in there as well?

getmore4less

The OP is saying the term was 5 years but the rate was a 10y fix.

If he went to term there should be no early repayment charge, nothing is being paid off early. (depends on the wording)

It seems clear to me if somewhat unusual.

60 payments 5 year term.
SVR in 2018 10y fix.

There is no need for the term and the rate calculations to be tied all