Early Repayment Charges With Northern Rock Remortgage

lizza5776

PLEASE HELP ME!!!

We took out a mortgage with Northern Rock in March 2005 on a 2-year fixed rate. However earlier this year we wanted to free up some money in the house due to having large credit card bills covering the work we had done on the house therefore increasing the value.

We got an extra £12000 on the mortgage (after a lot of hassle because they kept losing documents - it took over 7 weeks and 30 phonecalls on my part to resolve this)

Anyway...back to it. Northern Rock have charged me an early repayment penalty of £2600 on the initial mortgage, even though we have stayed with them. They will not budge on this, and I am now tied to a new 2-year fixed rate with another early repayment of just over £3k ending in April 2008.

What I would like to know is....

a) Can they do this? Is it even ethical to charge a customer to stay??
b) Has anyone any ideas on how I can get them to reconsider?

Please please someone give me some advice....

MarkyMarkD

Lizza

Either you've been very badly advised by NR, or you've not listened to their advice properly.

In the circumstances you describe, you should have kept your original 2 year fixed rate for the bulk of your mortgage until March 2007, and taken the extra £12,000 on a different mortgage product - or indeed their Standard Variable Rate.

Then you'd have paid no early repayment penalty.

The only reason they've charged you an early repayment penalty is that they've encouraged you to (or you've chosen to) put the WHOLE of the loan onto a different product whilst you were still tied into the original one.

So, to answer your questions:

(a) yes, they can do it, if YOU chose to end the original product early and if YOU chose to put the whole of the total new loan onto a different product; but no they can't ethically do it if THEY advised you to end the original product early when there was no need to do so.

(b) depends on what happened. If it was your choice, I would suggest you will get nowhere with them. If it was THEIR bad advice, I would complain vehemently and eventually refer them to the Ombudsman as it was clearly pathetic advice.


*** By the way, all the above is written on the basis that you took the further loan following advice from a NR branch or customer service centre, rather than an intermediary; if it was an intermediary, the intermediary is an incompetent idiot and should be reported for HIS/HER appalling advice ***

It should also have been very apparent from the loan offer documentation from NR that this penalty would be applied - was this not clear, as if so that is another reason to complain to NR.

dwight-van-man

It sounds as if NR have put you through their Mortgage review process to arrange a new deal at the same time as arranging the further advance, which should have been done on a specific further advance rate as Markymark suggests. If you went direct to NR, write a complaint on the basis that even if you did sign the paperwork to make these changes, they should never even have been offered to you if it was going to put you in a worse position. Document in detail the whole process you went through and propose to them that your prefered solution be the reinstatement of the original loan with the further advance done as a seperate loan. As it should be and as you requested. Also, send the letter 'signed for' as mail sometimes gets lost in head offices.....

sikejsudjek

Whether they can do it or not, its still a disgrace. Who advised you ? Was it NR ? If it was, you were badly advised.

Keep complaining, and keep going. You won't get them to do anything from the first few letters. It takes at least three letters to get anywhere with Banks. When they refuse, ask for a deadlock letter and go to the Financial Ombudsman (you can print off the form from their website). Once you've got that far, someone more senior at the bank will have a look at the complaint.

Remember to keep at them. Don't worry if they tell you that it was in their terms and conditions. They should have given you the alternative of having another loan, rather than sharp practice like this. Best of luck.

MarkyMarkD

NR make most of their profits from churning customers from one product to another, particularly taking advantage of customers they've mugged into taking their "help with fees" scam who then have to repay the fees because they are churned before the fees' extended tie-in period.

As it's such standard practice at NR to churn, it wouldn't surprise me if they had advised you in this appalling way, but IF they told you the fee would apply, and you chose to go ahead, your case is significantly weakened. As I said before, I'm fairly convinced that their documentation which they should have sent you before you agreed to the further loan would have detailed the penalty.

dwight-van-man

MarkyMarkD wrote:

NR make most of their profits from churning customers from one product to another, particularly taking advantage of customers they've mugged into taking their "help with fees" scam who then have to repay the fees because they are churned before the fees' extended tie-in period.

As it's such standard practice at NR to churn, it wouldn't surprise me if they had advised you in this appalling way, but IF they told you the fee would apply, and you chose to go ahead, your case is significantly weakened. As I said before, I'm fairly convinced that their documentation which they should have sent you before you agreed to the further loan would have detailed the penalty.

And the alternative is leaving customers to pay SVR? Theres a difference between churning, which is clearly what has happened to the OP, and offering customers a new deal at the end of their existing rate, at which point the HWC is available to them again. I'm not defending the extended erc on the HWC, but this is totally transparent so the client is fully aware of it and since 89% of NR business comes from brokers, its hardly NR thats 'mugging ' people into taking it. Incidently, it is only because far too many of these brokers are content to punt a 2 year deal then forget about the client that NR get the chance to review as many clients as they do.

Whats happened to the OP is deplorable and she should complain as much as it takes to get her case sorted out but please don't claim that churning in this manner is standard practice... unless of course you are prepared to prove it.....

homer_j_3

lizza5776 wrote:

PLEASE HELP ME!!!

We took out a mortgage with Northern Rock in March 2005 on a 2-year fixed rate. However earlier this year we wanted to free up some money in the house due to having large credit card bills covering the work we had done on the house therefore increasing the value.

We got an extra £12000 on the mortgage (after a lot of hassle because they kept losing documents - it took over 7 weeks and 30 phonecalls on my part to resolve this)

Anyway...back to it. Northern Rock have charged me an early repayment penalty of £2600 on the initial mortgage, even though we have stayed with them. They will not budge on this, and I am now tied to a new 2-year fixed rate with another early repayment of just over £3k ending in April 2008.

What I would like to know is....

a) Can they do this? Is it even ethical to charge a customer to stay??
b) Has anyone any ideas on how I can get them to reconsider?

Please please someone give me some advice....

Yes they can do this and will do this. You have taken a mortgage out after regulation had been introduced so you will have received your original key features document saying very clearly that this charge would be incurred if you repaid the mortgage back within a certain period.

When you came to borrow the extra, they will have sent you a key features document to say this is what we are doing for you, this is the amounts you are borrowing and these are the charges for doing as such. You will have then subsequently received a new mortgage offer backing the charges in the Key feats document to say what charges were applicable.

I agree whole heartedly that this is ethically and morally incorrect and would never give advice to do this in this manner, however, I feel that due to lack of knowledge and/or niavity and/or laziness in reading the documents sent and/or whatever other reason you may find justifiable, you will find it very difficult to get the NR to move on this.

If you want to be productive in trying to see what options you have open, I would suggest requesting a copy of the telephone calls and all the information that they can release under a data subject access. This will cost you a maximum 10 fee and they have 40 days to comply with your request.

If they do not have all recordings of the conversations, you may want to ring the consumer line of the FSA to see what NR's requirements are to holding these. I am not sure if they have to be recorded as such or held but it would be worth trying to arm yourself with this information. Maybe anothe industry expert can offer guidance on this?

Hope this gives you some insight into how you may be able to go into this and what objections you may face.

regularsaver1

I am sure that they would have had to detail all fees within the key facts illustration and offer

if all your mortgage has been put on one product that it explains it

NR could have offered a non-advised service, meaning it was up to you if you took the details on the key facts illustration and signed

if not and you were advised and not aware of this, then you would need to complain ect