Cheltenham and Gloucester - be careful, sorry, a bit long

DawnW

I have a fixed rate mortgage with C&G, which I am aiming to pay off as soon as possible after the end of the tie in period. Under the terms of the contract, I am allowed to overpay by 10% each year, of the balance remaining as of 1 January in that year.

Soon after taking out the mortgage, in 2008, I rang C&G to ask how I could do this. They explained the different ways I could do this - all well and good. The advisor them mentioned that I could do the 10%overpayment as a lump sum AND THEN I COULD STILL OVERPAY EACH MONTH BY AN AMOUNT NOT EXCEEDING THE STATED MONTHLY PAYMENT IN ADDITION. I was very careful to clarify this with her, repeated it back to her and she agreed with my understanding etc. I did not want to be liable for ERCs, or to contravene the rules in any way. She said no, it was fine, and even told me exactly how to do this, and gave me the relevant bank details etc. I was somewhat suprised because it was not mentioned in my contract.

Anyway, having been assured it was ok, I set this up, and have been overpaying as described, by a 10% lump sum plus a monthly overpayment most months, for the two years I have had the mortgage.

I went in to a C&G branch to make my annual repayment yesterday, but was told I could only repay 10% of my balance owed on 1 Jan less the amount of the two overpayments I have made this year. I was told that, if I overpaid by any more before the end of the fixed period (which ends this coming December) I would be charged an early repayment fee. They could not explain why I had been told I could do this previously, and indeed why I had never been charged. They rang their head office, and they could / would give no explanation either.

I realise they are fully within their rights to adhere to the terms of the contract, However, it contradicts what I was told previously by the head office, and presumably I would have been charged from now on if I hadn't questioned it, and had gone ahead and continued to overpay as I had done previously.

I can only assume that they wanted as much money in as possible in 2008 (thinking back to the banking mess) and were thus encouraging people who seemed like they were willing and able, to overpay at that time. Now that they have the taxpayers' money, I assume they don't need to do this (C&G is a subsidiary of Lloyds TSB) - or perhaps I am being cynical....

Has anyone else had a similar experience? If others are overpaying a C&G mortgage within a tie in period, do take care.

Anyway, it has made me more determined than ever to pay it off - goodbye C&G as soon as possible after 31 December 2010!

bigchipper

Hi Dawn

I actually called them on Fri with the same thought in mind. I wanted to pay the 10% extra by increasing my monthly payment. I was told that I could pay extra each month up to double the fixed payment and if I wanted also 10% in a lump sum. I haven't gone ahead as yet as my monthly payment was in process.

b-c

Doglover

Hi, I was also told the same last week. I double and triple confirmed it with their representative and was assured in the same terms as both of you.

OP - Perhaps if you ask them to get a copy of the recorded conversation that you had with them they may "allow" you to make the over payment you had intended to make, penalty fee.

Queen-Bee_2

Dawnw and Doglover - I had exactly the same problem with my former Portman mortgage when it was taken over by the Nationwide. In my case, I was (still am) on a fixed term and could overpay by 5% per year, as well as overpaying by £500 pcm.

When Nationwide took over, they stated that in future you could only repay 5% per year. Because the Portman had never made the overpayment facility clear in the terms and conditions, Nationwide immediately stopped it. I think I talked about this in my diary at the time.

I was not pleased and kicked up a huge fuss. :mad: However, I then discovered that I could shorten the term, which meant I could pay much more per month and still repay the 5% per year as a lump sum. The shortening of the term was without and admin charge, and if I want to lengthen it again they will also do this without charge (I got them to confirm this in writing!!!!).

I don't know how helpful this is to you, but it might be worth exploring if you run into a wall. I can understand your frustration. Best of luck, and I look forward to reading the outcome!
QB

DawnW

It is interesting that other people have had the same conversation with C&G - thanks for your replies. I really don't trust them now not to just randomly add charges - they seem to make up the rules as they go along :mad:.

I shall put the money I would have overpaid into a savings account I think, and pay it all off at the end of the fixed period, and a bit more besides. It would be great to pay the whole lot off then (I am now down to £34, 653 from 70k two years ago) but realistically probably won't be able to do this straight away and have enough money left for the renovations that I want to do. However, I do realise that I am lucky (kids are grown up and OH and I work really hard and are frugal though), and the mortgage's days are definitely numbered. I hate debt!!