Redemption Penalty - Are They Legal???

herbiesjp

Sorry, but how do you blame brokers for Early Repayment Charges? The broker does not charge the ERC. The broker does not get a penny of the ERC.

jamesd

andyinlondon wrote:

And yes I have just redeemed my mortgage and I had to pay an ERP on it.

Sorry to read that you picked the wrong product (or that your broker did not explain the terms well enough for you) or that your circumstances changed.

andyinlondon wrote:

I do not like to be ripped off

You weren't ripped off (necessarily). You chose a product type that has those charges, presumably as part of the costs of setting up a fixed rate that have to be covered from setup costs, interest rate and/or early repayment charges if you exit before the interest rate bit has had a chance to recover them.

If the charges are fixed for the whole term and it's near the end, it is possible that I'll agree that you were ripped off and should get some of the ERC back, since by then much of the costs of securing the funds would have been paid.

thesaint

I have checked that I would've been better off if i'd fixed my rate two years ago. I wonder if I can reclaim the money from Nationwide?:rotfl:

andyinlondon

A couple of points:

1. I did not say a broker had ripped me of nor did I say they were responsible for my lender ripping me off....
I did say I was not happy with their ATTITUDE!
To me reading this thread, the attitude shown by the brokers on here is worse than a rabid estate agent who cares nothing for their client just so long as they get their commission or fees.

2. The OFT has made a statement to the effect that the charges levied by some lenders are against the unfair contract terms regulations and cannot be justified in court. They are therefore unlawful.
Just because a term is written in a contract it does not make it legal or lawful.

The product I had from the lender was ok for me at the time.
Unfortunately the lender was not.
Blood sucking leeches is the mildest term I can think of to describe them.

For example my salary with my previous job was paid on the 20th of every month, the lender refused to move my payment date to the 21st to ensure funds would be in the account to cover the mortgage, In fact they deliberately started to make the DD withdrawals late, e.g. on the 8th or 9th of the month instead of the 1st as it had been running. This caused a few DDs to be bounced and then the lender could slap additional charges on to my account.
They said that I would have to pay an additional month’s mortgage as a fee for them to change the DD date.
So I cancelled the DD and paid by Switch card every month, and for that I got charged an additional fee of £20.00 per month for not having a DD.

I was not on any special offer, fixed rate or low rate scheme when I redeemed the mortgage. All that had run out several years ago, it was a standard repayment mortgage.

And yes I got charged an ERP (early repayment penalty) fee along with a whole bundle of other charges… basically any and everything they could think of to charge me for.

So yes I do think I was RIPPED OFF

And yes I am claiming it all back

And I am more than willing to go to court, in fact I would welcome the opportunity to publicly show the underhanded and unlawful practices of some mortgage lenders.

So anyone who still thinks I am wrong
Or that all mortgage companies are saints (or of course are employed by them)

Flame away ……. Go on give it your best shot!

Andy

jamesd

Yes, some charges - penalty charges - are unreasonable. But the OFT does distinguish between penalty charges, fines, effectively, and costs.

Definitely sounds as though that lender wasn't a really friendly one for you to have. Who was it?

andyinlondon

i had best not name them on here ( dont want to get the thread / post pulled) But Have a look on the CAG forums i have started a thread there in the mortgage co section Jamesd.

i have never had a problem with true costs, after all they have to make a profit and pay their staff ect.

It is getting ripped off i object to

sydney2002

It seems that the CAG are tellign folks to hold off making a claim to not pay your ERC.
Looks like 3 lost cases have rsulted in the CAG telling folk to not go forward anymore.

Looks like the lenders have put their foot down and thrown in the big soliciotr boys and girls.

danjberry

tamadus wrote:

LMAO now lets do some simple maths here. assume a £100,000 mortgage at 0.35% that gives £350 for basically doing a search of lenders and filling a form in. Now where do we think that money comes from? is it something that appears by magic? Noooooo it's passed onto the customer, by virtue of very simple economics. I also know that a broker will usually handle any insurance needed and commision on that is a lot higher.

Brokers get slightly better (but not always) deals because its cheaper to pay them a commission than to maintain branch offices with large overheads. I actually got a better deal on my last mortgage than a broker friend could find, and I got it with no ERC.

you have admitted in this post that branch staff are more expensive so why would you begrudge a broker getting only £350 for a £100K mortgage? if a lender only did direct cases then surely the extra money they have to pay for their staff will as you put it "passed onto the customer". whilst if they did broker cases they are paying less so the rates will be cheaper as smaller overheads.

so where does your arguement about broker fees come into play if it is pushing the lenders overheads down?

And as has been said beofre if you dont want to have an ERC applicable go for a higher rate with no ERC's

and thanks for the new reply sydney

Rocket

Dear All

I fixed rate deal expired at the end of August last year and I duly received a letter from my lender Northern Rock informing me that I would revert back to the standard variable rate.

Obviously for those of you that are aware of their high redemption penalties if I leave in this first year on the standard variable I am liable to pay £9800.00 which reduces over the next five year. After year 5 I can then leave without penalty.

Is there any advice anyone out there can give me regarding how to possibly get round this. Thanks

regularsaver1

Rocket, this is not the same as sometimes with lenders, when you transfer to standard variable you are not tied in. This says that you could have applied for an alternative product

on yours I presume, your redemption penalty was informed to you at beginning as you are telling us now. The FSA are not looking into ERC's at present I'm afraid