Mortgage Terms and Conditions have been incorrectly administered

headknee

I've received a letter today from my mortgage company (Hanley Mortgage Services Ltd) stating:

'Following a change in the interest rate applicable to your mortgage account in February 2010 a review of your account has show that its terms and conditions have been incorrectly administered. Your account was subject to a condition stating that the Standard Variable Rate applied to your mortgage once any fixed or discounted period expired, would not exceed 3% above the Bank of England Base Rate. We have identified that the interest rate you were being charged fell outside of this condition in December 2008'

They calculated that I had paid £3212.74 in excess and have used it to reduce my capital balance.

I have a few questions:

1. Can I get them to give me all or some of that excess rather than reducing my balance? (baby no. 3 due in under 2 weeks and it'd come in handy!)
2. Am I right in thinking they have 'breached' their contract (or as they say - incorrectly administered)?
3. Can I take any advantage of this? Get more out of them/switch mortgages without any fees, etc?

Thanks in advance for any help...
Neil

Freddie_Snowbits

1 You can always ask, but as they have reduced your balance by the said amount and you really, until just now, not needed the money, it may not be worth it.
2What exact term have they broken, interest rates have been historically low in recent times, but you were probably on a fixed term and the rate fell even lower, so in effect you have benefitted from thsi review
3 It would probably cost money to switch, but as a start, you culd ask for a reduced payment to reflect, lower capital to pay and lower interest rates.

If you don't ask, you don't get!

betmunch

They have knocked 3 grand off your mortgage thanks to a clause you didnt even know about and until you heard about it you didnt care and you want to take advantage of them?

dunstonh

1. Can I get them to give me all or some of that excess rather than reducing my balance? (baby no. 3 due in under 2 weeks and it'd come in handy!)

You can ask.

2. Am I right in thinking they have 'breached' their contract (or as they say - incorrectly administered)?

Breach of contract and clerical error being resolved are two different things.

3. Can I take any advantage of this? Get more out of them/switch mortgages without any fees, etc?

I find that a bit distasteful. Thankfully, you have no entitlement to such a thing as that

getmore4less

What fees would they charge you?
You are probably outside any ERC on the SVR.
Probably just the redemption fee whats that? (£50-£200ish?)

You could ask for the money but why borrow if you don't need to.

RX-78

I dont understand the resentment by some posters here.

The lender has clearly made a mistake - wether it is administrative/clarical it shouldn't really matter. The fact is they have made a mistake by their own admission and breach the terms of the contract. Why they did this shouldn't matter as far as the OP is concerned - just like the lender will not consider why a borrower might have defaulted (even if it is due to administrative/clerical mistake). They will not say "thats ok, just pay us the money and we wont bother with putting a bad credit against you" - and if they do, it will be due to good will gesture which they choose to exercise. How many of us were hit by banks with unfair charges because we broke their T&C? Will they waive their fees if we explain "I have conducted review of my account and due to clarical mistake, my account was a few pounds less than previously thought thus exceeding the overdraft. This was a genuine mistake and I will amend the account accordingly with immediate effect".

I'm no expert in law/finance, but I would suggest talking it through with someone that knows. Try Citizen's Advice for starters?

headknee

Ok, perhaps point 3 was not worded very well, it was just a hasty post to get some views before I contact them tomorrow (they've set up a special hotline for it)...

I'm just wondering if I should just accept what the letter says, think myself lucky that they've admitted the mistake, and be grateful for the £3,000+ off my mortgage

OR

Is there more I'm 'entitled' to, due to their mistake? Could I have earned more interest on that money compared to the saving I'm now making due to an extra £3,000+ being taken off now?

I'm not a financial expert, so registered with this great site to see if I could get a little help or guidance, that's all!

potter78_2

I'd certainly ask if you can have the money back.

Whilst it's a great bonus to find you've been overpaying on your mortgage, if they don't allow you to be refunded the difference they've effectively forced you to overpay your mortgage through their own "administrative" error. I.e. If they had not made this error you'd have approximately £3000 (maybe slightly less depending on the interest calculations) sitting in your bank account which you could choose to spend overpaying your mortgage or something entirely different (e.g. on your 3rd child!).

Obviously it's in their interest that you've paid more of your mortgage off as it lowers their risk profile, but I certainly think its worth asking the question.

opinions4u

1. Ask nicely and you might succeed. If you are successful you need to remember that this will also generate an interest charge to your mortgage account. You could ask what would happen if you missed a handful of payments - if there would be no derogatory impact on your credit file this may be another way of recovering the funds. Again, it will generate additional interest charges as your debt rises again.

2. I don't think there's a contractual breach.

3. You can ask, but I wouldn't have thought so.

One thing to consider at the moment is that their error will almost certainly have reduced the amount of interest charged on your mortgage account. In other words, you are better off for it. Any action taken to reverse that situation will actually reverse the benefit that you've had.

RX-78 wrote: »

I dont understand the resentment by some posters here.

I don't see any resentment.

How many of us were hit by banks with unfair charges because we broke their T&C?

I believe the courts eventually ruled none.

I'm no expert in law/finance, but I would suggest talking it through with someone that knows. Try Citizen's Advice for starters?

CAB will probably provide similar answers to those seen above.

RX-78

Look at post 3&4.....

p.s. so far the courts has been in favour of the banks too. http://news.bbc.co.uk/1/hi/business/8376906.stm

dunstonh

Look at post 3&4.....

hello :whistle:

Its not resentment. However, it was the thought of going after some form of compensation (which is what it equates to) when there is really no justification for it.

in my eyes, the OP has a result. Overpaying the mortgage without realising it and reducing their debt down quicker and not being out of pocket for doing so as the lender has corrected the error to ensure no financial loss.