Can C&G extend my fixed term mortgage?

Moo1

We have a 2 year fixed rate mortgage which was at a rate of 6.69%. It completed in November 2008 and we made the first payment in December 2008. The mortage offer letter states that after 24 monthly payments, the rate will drop back to SVR. It also says that it assumes the mortgage will start on 1st Feb 2009 (which it didn't, it started earlier). The letter also says in an earlier section that the fixed term mortgage is until 28th February 2011.

We assumed that it only says the mortgage is at fixed term until 28th Feb 2011 because of the part that says the letter assumes the mortgage would start Feb 2009 - i.e. 2 years.

Now C&G have said that we don't drop to SVR until the end of Feb as per the letter - but we are arguing that this means it isn't actually fixed for 24 months - in effect they are wanting to make us pay for 26 months at the higher rate.

Surely this is a breach of contract? I appreciate the letter talks about an end date of 28th Feb 2011 - but it also clearly refers to 24 payments at 6.69% and SVR from then onwards.

Has this happened to anyone else? Can C&G enforce this? I would be very grateful for any advice. Many thanks for reading.

beecher2

No, it isn't a breach of contract - very few 2 year deals last exactly 2 years and your letter told you when the deal would end. The only way of getting out of it early would be to pay the ERC

Moo1

I don't understand how/why very few 2 year deals last exactly 2 years? Why would it not?

beecher2

Because they're sold in batches - I've never had a deal last exactly 2/3/5 years. Have a look at these deals from Halifax
http://www.halifax.co.uk/mortgages/existing-customer-fixed-95ltv.asp
They all end on 31 December, as long as they start before March 2011.

Moo1

In that case the letter clearly contradicts this by stating that there will be 24 monthly payments at 6.69% and the rest at SVR. It states that it 'assumes' the mortgage will start Feb 09 - which it didn't. It does not say - 24 monthly payments plus a further 2 due to the end date of this batch. Thanks for your advice but I cannot see how this isn't a breach of contract and we will no doubt have to report it to the financial ombudsman.

[Deleted User]

It states that it will be 24 payments based on the assumption that it starts in Feb 09. If it started earlier or later, then the payment would be more or fewer than 24.

I would save the postage cost.

betmunch

It ends on the date it says it ends. All the other bits are assumed so they can give you figures. The only bit that never changes is the end date of the fix.

This is the third time this complaint has come up this month and I have never seen it before this month!

Moo1

"It states that it will be 24 payments based on the assumption that it starts in Feb 09" - no it doesn't. It does not link these two elements together. It states that there will be 24 payments at 6.69%. 24 payments at 6.69% is therefore exactly what we would expect to pay. Anything else is completely misleading and does not represent a 2 year fixed deal. It cannot be sold as that if that is not what it is.

beecher2

Moo1 wrote: »

In that case the letter clearly contradicts this by stating that there will be 24 monthly payments at 6.69% and the rest at SVR. It states that it 'assumes' the mortgage will start Feb 09 - which it didn't. It does not say - 24 monthly payments plus a further 2 due to the end date of this batch. Thanks for your advice but I cannot see how this isn't a breach of contract and we will no doubt have to report it to the financial ombudsman.

The letter doesn't contradict this at all - it tells you it will be 24 months assuming it starts on Feb 09. It clearly isn't a breach of contract and you're wasting your time since the letter clearly states that it is until 28 Feb 11. Treat it as a lesson learned.

It can indeed be sold as a 2 year deal even if it doesn't last exactly 2 years - it is common practice.

Moo1

"It can indeed be sold as a 2 year deal even if it doesn't last exactly 2 years - it is common practice"

Being labelled as common practice does not make it correct. In fact it makes the situation a great deal worse if misleading information is regularly being perpetuated. A 2 year deal is a 2 year deal - for everyone apart from the financial sector, it would seem? That is not acceptable.

dunstonh

Being labelled as common practice does not make it correct.

FSA allow it.

Mainly as the financing of fixed term rates makes it difficult for it to be done another way. Some people will get 2 years and 3 months, others may get 1 year 10 months. As long as the offer period is around 2 years and within a reasonable gap they dont have a problem with using the term as an example. However, you will also find that the deal information clearly states the expiry date as does the contract that is signed.