Redemption Fee

mountainofdebt

I know this has been discussed many times before but I was hoping someone could clarify the situation for me.

I've come home to a letter today stating that the amount needed to redeem the account in full is now £227 which is made up of £2 interest and £225 redemption fee which apparently is payable on redemption of all mortgage accounts held with my lender.

When I initially spoke to the lender I was told that this was a fee for the work needed to be done for the lender's interest to be discharged - although I'm sure I read on here soemwhere that this would only cost £80 at a solicitors.

(Although it begs the question so what if their interest isn't discharged, the mortgage is paid off and I don't plan on selling, but that's me being stroppy.)

I then asked where in the t&cs had I signed up agreeing to this fee and I've looked not only in my offer letter but in the mortgage conditions booklet issued as well and I can't see any mention of this fee - I was told that this request would be treated as a priority and I would find out in the next 48 hours

So I guess my question(s) are

1. Has anyone actually got out of paying this, especially as the t&cs I've got don't seem to mention this charge - the guy I spoke to said each year with my statement I was sent a list of charges but if I didn't sign up to them are they legal?

2. What would be the implications (apart from the charge going up!) of the interest not being discharged? Would the mortgage as such still appear as unsettled on say my credit report, even though the balance was nil? (I've paid the £2 interest)

TheWheelMan

You have my sympathies. Personally I think this is another scam the banks and BSs are pulling like the unfair charges for late payments its just that its gone relatively unnoticed so far. I found this question because I was going to ask a similar one and I was searching the forum to see if it had already been asked.
I sold my house last April. Now in the past when I've moved house the lender has sent a redemption statement showing how the redemption figure is calculated. This time all my solicitor got was a payoff figure for the proposed redemption date and a daily interest figure to calculate the amount required if redemption was delayed.

I found out later that the figure included a £275 redemption fee. I believe some lenders refer to it as a 'Deeds production fee' or 'Deeds Sealing fee' to make it sound like its a legal thing.

Now I believe, but I can't be sure, that when I took the mortgage out in 1998 the lenders fee for this was £50 !!!****!!!

So I wonder how they can justify this. Does it represent the true cost to them of sending the deeds to a solicitor and closing the account? I doubt it, but I don't know what can be done about it. I wondered whether Martin would be interested in championing this in they way he has the unfair charges for late payments, unauthorised overdrafts etc?

Martin, if you're reading this, you have at least two loyal Moneysavers who'd like you to get invovlved, probably many more if you were to ask in the weekly email!

Cheers

Bob

StevieJ

My lender suggests leaving a balance of £500 and paying the small interest payment each month, I would then have access to my original mortgage funds (If I should need it) and not have to pay redemption fee. The ongoing interest rate is OK (currently BR+0.25 until Nov and BR+0.65 permanently after that).

MarkyMarkD

My attitude to this depends on what you were told when you took the mortgage out.

If you took it out when the fee was £95 or £50 or whatever, then an increase to £275 is a bit OTT.

If you took it out when the fee was £275, and they still want £275, then you haven't got anything to complain about, irrespective of the argument about what it "really costs". It's a fee, like any other, and lenders are allowed to make a profit on some elements of a mortgage just as much as they are allowed to make a loss on others.

david29dpo

totally agree with above. i have just been charged £250 to pay off a mortgage i took out 3 years ago. it was £250 then and £250 now. if when i signed it was say £100, i would want to know why and fight for the extra £150 to the death.