Early Redemption Charges

shebafred

A general query here!

My husband passed away last year which meant I had to sell our home as I couldnt afford to pay the mortgage (we had no life insurance). The property had an LTV of 85% when we took it out but due to the crash we had only about 6k equity left in it. I was charged an early redemption charge by abbey national because they wouldnt give me a new mortgage without a deposit of 15% on a new property. Is there any way this money could be clawed back? The other issue I have is I called them when my husband died and advised them of the situation. They told me at the time I would be entitled to a 6 month payment break. Instead, after 5 months they sent me a letter to sign and send back which was to capitalise the arrears that had built on the account - which meant I didnt have a payment break at all. I feel really cheated here and finally am a bit stronger to take on a fight with him regarding these matters but do I have any recourse?

Thanksd

74jax

shebafred wrote: »

A general query here!

My husband passed away last year which meant I had to sell our home as I couldnt afford to pay the mortgage (we had no life insurance). The property had an LTV of 85% when we took it out but due to the crash we had only about 6k equity left in it. I was charged an early redemption charge by abbey national because they wouldnt give me a new mortgage without a deposit of 15% on a new property. Is there any way this money could be clawed back? The other issue I have is I called them when my husband died and advised them of the situation. They told me at the time I would be entitled to a 6 month payment break. Instead, after 5 months they sent me a letter to sign and send back which was to capitalise the arrears that had built on the account - which meant I didnt have a payment break at all. I feel really cheated here and finally am a bit stronger to take on a fight with him regarding these matters but do I have any recourse?

Thanksd

Firstly I am so sorry for your loss and understand how you've wanted to leave a break before tackling this situation.

I am, however, of the belief that a 'payment holiday' doesn't actually mean you get 6 months free mortgage 'forever', I do think it either get's added on to the amount outstanding or you extend your mortgage by the 6 months missed.

This should have been explained when you took out the payment holiday. Have you queried this with the company?

shebafred

I spoke to them when i receivd the letter to capitalise the arrears. They denied that they had offerred a payment holiday. I thought that with a payment holiday the account would be frozen for the 6 months to allow me to sell up without incurring additional charges

VIGILANT22

A payment holiday is a period of when you don't make repayments on your loan, although interest continues to be charged on the loan balance.

dunstonh

Sorry for your loss.

Is there any way this money could be clawed back?

The lender is quite correct to charge you within the law.

The other issue I have is I called them when my husband died and advised them of the situation. They told me at the time I would be entitled to a 6 month payment break. Instead, after 5 months they sent me a letter to sign and send back which was to capitalise the arrears that had built on the account - which meant I didnt have a payment break at all.

The 6 months period is not a free mortgage period. It allows non payment for a period of time whilst things are settled. The payments you should have made effectively get added to the balance.

Also, whilst the authorised arrears/payment holiday may have been available to apply for, it is not automatic. So, they may have told you that you its available but you have to ask if you want it.

I thought that with a payment holiday the account would be frozen for the 6 months to allow me to sell up without incurring additional charges

No.