Northern Rock 'mortgage review' fee

emcwill

Our 2 year fix with NR is just coming to an end and after a thorough trawl of the market (by myself and also with the help of an L&C broker) it seems that the NR 4.99% 2 year fee-save fix is the cheapest/best product for us for various reasons. NR want us to pay a £295 'mortgage review' fee to tansfer to the new product when our fix ends at the end of August.

I've searched this forum and found a few threads about complaints over exit fees but I wondered if anyone had had any luck contesting this particular fee with NR? What really riles me is that they'd charge me £250 exit fee to leave them but £45 more to stay!! How is that valuing customers??!!

I've written a polite but firm email to them to kick things off pointing out that it costs more to them in admin terms to take on a new customer (who'd pay nothing for this fee-save product) than it does to transfer an existing one, but if they try to fob me off (as I'm sure they will) how safe ground am I on if I start threaening the Financial Ombudsman Service? Anyone else tried this in this case?

Any feedback really appreciated and I'll let you know how I get on!

Robert_Sterling

What you have to decide is is it better to cough up and continue with NR or leave them, pay exit fee, and get your mortgage elsewhere.

emcwill

Well I'd rather cough up and stay (I have to pay back the £1k help with costs we took otherwise!) but I don't think that's the point. I think that £295 to cover the admin involved in transferring us is unjustifiable, is it not? (especially when there is more admin to take on a new customer.)

dwight-van-man

The £295 covers more than just the work involved in transfering the deal. NR want to hit a certain margin across their retention lending and theres two ways to do this. Firstly, offer existing customers deals that arn't quite as good as those offered to new borrowers, and secondly, offer exisiting borrowers the same deal but with a fee to cover the overheads involved in this and the profit margin built in. Bear in mind also that fixed rate funds cost money to buy in, as NR don't have the same volume of savings customers to cross-subsidise their mortgage lending, nor do they pursue the same rigorous (sp?) cross-selling process once the mortgage has completed.

There is more admin involved in taking on new clients, but this is offset by an assumption that a certain %age of these new clients will remain after their deal expires. NR have followed a policy of building a further small margin into the rate charged rather than becoming involved in loss-leading rate wars, thus avoiding the situ where exisiting clients are subsidising new clients.

I am neither justifying or condemning this fee, rather explaining the company rational behind charging it. Having said that, I would be very surprised if you got it refunded.