Urgent help/advice needed regarding mortgage

needuradvice

hi guys,

I'm hoping someone can urgently help one of my friends. She took out a 2yr fixed mortgage with a company called TMB (part of halifax/lloyds group) about 5 years ago.

After the 2yr fixed period ended in approx april 2008, she got another offer to fix her rate for 5yrs to 6.85% until 2013 and she took this offer too.

This is where the problems are:-

1. She lost her job approx july 2008 due to serious injury, so the government have been helping since that time.

2. Her provider has stopped trading and won't let any existing mortgage holders move to other providers without showing they have worked for at least 2yrs - (but this isn't the issue!!!)

3. She wants to cancel this fixed rate, so that she can go onto the standard variable rate which is only 4.85%.

TMB are saying she can't get rid of her fixed rate as they are not trading anymore, but yet once she finishes her fixed period, then she will automatically be moved to the SVR at the time.

She wants to know if she can somehow force them to cancel her fixed rate and she is willing to give any redemption charges as necessary. Any advice?

thanks

kingstreet

If they are refusing to allow her to leave the fix, even if she pays the early repayment penalty, I can't think of a way out. Would it really be worth her paying thousands to get out of a 2% higher deal which ends in two years?

needuradvice

hi kingstreet and thanks very much for a very fast reply. The early repayment charge is £1418.16 if she can get out as of today. Do you not think its worth it? Is there a way of working out the 2% difference?

sismith42

There is indeed. http://www.moneysavingexpert.com/mortgages/compare-mortgage-rates
not knowing the amount nor the term, I can't really run the thing and get a meaningful result for your friend. It also assumes that she has the fee in-pocket (and so isn't going to add it to the mortgage). Any chance they'd go interest only at least?

needuradvice

thanks sissmith42, but i used another calculator before i saw your link.

Here is the comparison:-

PaulLuke

That calc shows a saving of 686 per year. Given that the fix finishes in two years you need to compare the saving and cost over two years. This means that it will cost £1418.16 to save £1372 so doesn't look worth it to me!

Conrad

I suspect lowest monthly cost is a priority so these typcial cost calculations are next to meaningless to the OP in the context of her need to reduce monthly outgoings.

OP - you need to complain and cite the 6 core FSA principles known collectively as TCF. In particular state they are treating you munfairly and not meeting thier obligations under the TCF rules.
If they still decline to ammend the mortgage, then go to the Ombudsman.

kingstreet

That was my thinking, Paul.

It doesn't look worthwhile to me.

Conrad - do you see them waiving the ERP? If not, she might as well use the £1,400 to subsidise her mortgage payments for the next two years.

It would be smashing if she paid £1,400 and got onto SVR for it to go up, wiping out the "saving" she's just forked out to achieve.

needuradvice

I can see where Paul and Kingstreet are coming from. Are you guys definately sure that I've done the correct calculations? If so then i'll tell her to stick with it.

Her question mainly related to what conrad was saying, which is to find out if a lender can force someone to stay on the agreed 5yr fixed period or does she have the right to cancel this offer anytime and move onto a different offer?

kingstreet

Normally, if you're prepared to pick up the tab and pay the penalty they'll let you do what you want. However, if in this case the only option is SVR at 4.85%, she's better off sticking with it.

I wondered if Conrad had heard anything about TMB waiving penalties to get rid of borrowers, but it doesn't sound like it.

needuradvice

TMB did say that eventually ALL clients will be moved to another bank within the lloyds group, although i don't know when that will be.