Redemption Penalty - Are They Legal???

Rocket

Regularsaver

Yes we was informed when we took the product just thought I would ask. Damn good deal at the time but hey ho will have to stay put for the next 5 years as I do not want to stump up penalty fee.
thanks for the speed response.

toonfish

if "zootscoot" paid as much attention to making his mortgage repayments as writing letters, it's unlikely that any penalties would have been incurred.

early redemption fees are not illegal or unfair, you simply can't have your cake (the fixed or cheap rate) and eat it (dump it when it suits you). The banks have to raise funds at given rates and are simply protecting their investment.

regularsaver1

who zootscoot?

toonfish

regularsaver1 wrote:

who zootscoot?

his/her letter is on page one of this thread. I seriously think the short term mentality of "get a few quid back" is going to bite us all on the !!!! unfortunately. SVR's all round before you know it, with huge set up fees (until someone tries to claim them back as well).

regularsaver1

yeah i've already heard stories of some people managing to get ERC's back - what next

jamesd

It is worth remembering that there are some charges in the mix that probably are unfair. If CAG is looking for a case that may succeed, here's the recipe:

1. Someone who has defaulted on their mortgage and had the property repossessed. They have breached their mortgage contract, so it is now a possible penalty for breach.
2. Someone whose default was not their own fault - unemployment due to accident, say - but who is now employed again and can afford the costs.
3. Someone on a fixed rate deal where base rate is significantly higher now than when the mortgage was taken out. In this case the money can be lent to someone else at a profit - and a greater one than with the original customer because the money was secured at a lower interest rate than now.
4. Someone on a mortgage where the costs to leave early do not change as time goes on, so they can't easily be explained as the current loss by the lender.

With all those factors in play I expect the consumer to win at least something because the research into the mortgage industry will end up supporting their claim and that independent evidence is likely to be persuasive.

I still wouldn't want to be the first case. The mortgage lenders have clearly seen what has happened elsewhere and don't want to follow the same course, particularly when many of the charges for early departure actually are likely to be a fair reflection of costs of arranging the money in the fixed term case.

Maud_Boggins

Interesting thread here. And before I write it - please - for the love of God and all his harem - DO NOT RESPOND TO ME IF YOU ARE A NAZI BROKER OR OTHERWISE or if you have a 2you should have known what you signed" axe to grind. Go and become a traffic warden instead if life is so black and white...

My idiot of a solicitor paid by redemption fees to my mortgage broker 6 weeks before it was due to end. I hav etherefore, today, paid £5000 to my lender when I only had one month left to pay until I was out of it. I haven't spoken tot hem yet, but does anyone know if I have a case? A lasy on an earlier thread stated that she offered to pay the remaning months payment to get the £5000 back and they refused. How can this be a fair representation of the losses? Can someone help as I would like to claim! This all happened because my solicitor did not send me a completion statement to check befor ehand! Maybe I have a claim with him! Who knows!

dwsjarcmcd

Maud_Boggins wrote:

Interesting thread here. And before I write it - please - for the love of God and all his harem - DO NOT RESPOND TO ME IF YOU ARE A NAZI BROKER OR OTHERWISE or if you have a 2you should have known what you signed" axe to grind. Go and become a traffic warden instead if life is so black and white...

My idiot of a solicitor paid by redemption fees to my mortgage broker 6 weeks before it was due to end. I hav etherefore, today, paid £5000 to my lender when I only had one month left to pay until I was out of it. I haven't spoken tot hem yet, but does anyone know if I have a case? A lasy on an earlier thread stated that she offered to pay the remaning months payment to get the £5000 back and they refused. How can this be a fair representation of the losses? Can someone help as I would like to claim! This all happened because my solicitor did not send me a completion statement to check befor ehand! Maybe I have a claim with him! Who knows!

Why are you blaming your lender (or for that matter brokers!) go speak to your solicitor!

andyinlondon

Maud it looks like it was a mistake by your solicitor that has caused this.

you need to look to your solicitor to recoup your losses on this one.

get some independant advise, a competant solicitor if there is such a thing before you proceed.

spike9

Sorry if this has been covered earlier. I can clearly see that an early redemption charge is justifiable if some rate incentive has been offered. A few years ago I was stung by a three month penalty interest payment on a mortgage which had been running for several years and on which I had paid the SVR ( and a consistently uncompetitive one at that !) from day one. OK it may have stated this in the terms but it was my first mortgage and I was rather more naive then. I was hit with a penalty of over a grand and I can't see that that was justifiable or fair ? Anyone else had similar and done anything about it ?