Mortgage Exit Fees successes and failures

NeilB

(Just for the sake of discussion.....!)

Ok so you're saying they are making money on the interest, just not as much as some might think.

However isnt what you guys are saying oversimplifying things? I understand the concept of the net interest charge but doesnt this assume that a building society/bank ;
1) only has 1 outgoing (the interest paid to savers) and 1 income (mortgages/fees) to get this 1 to 1 relationship, and
2) they have the same amount in savings (to pay interest on) as they do coming in from mortgage interest?

They will have other forms of income as well as investing savers money in many different ways, so couldnt you argue that those can offset the cost of paying saver's interest so there doesnt have to be this direct relationship? Or that you simply have more money in mortgages than you do in savings. In either case you could say they make money on the mortgage interest and isnt just paying off saver's interest.

Take your point on the FOS complaints.

arkie

Look what is going to happen to free banking thanks mainly to the people who are chasing their bank charges, free banking days are coming to an end , soon we will all pay to bank and do transactions thanks to the few people who cannot manage a bank account. What will happen and is happening with exit fees lenders are reducing or even removing them and charging more fees upfront, so again the few who want to claim( ambulance chasers in my opinion) will ruin it for all of us. The days of fee free mortgage from lenders and brokers IS coming to an end.

dunstonh

Ok so you're saying they are making money on the interest, just not as much as some might think.

However isnt what you guys are saying oversimplifying things? I understand the concept of the net interest charge but doesnt this assume that a building society/bank ;
1) only has 1 outgoing (the interest paid to savers) and 1 income (mortgages/fees) to get this 1 to 1 relationship, and
2) they have the same amount in savings (to pay interest on) as they do coming in from mortgage interest?

They will have other forms of income as well as investing savers money in many different ways, so couldnt you argue that those can offset the cost of paying saver's interest so there doesnt have to be this direct relationship? Or that you simply have more money in mortgages than you do in savings. In either case you could say they make money on the mortgage interest and isnt just paying off saver's interest.

With variable rate that is possible. However, fixed rates tend to be funded by the money markets and on bulk at a fixed rate to the investors that lend the money. Effectively it isnt the banks money that is being lent. This is why Northern Rock suffered so much as they were the most reliant on investors. So, if the investors are getting 6% then the bank can decide to lend it out at 6% and make no profit on the rate but charge a fee that covers costs and provides a profit or they can lend it out at 6.4% and make some on the rate.

There was also a period when money was hard to find and cost more when they got it so the fees went up during that period for rates that werent particulary attractive. That has eased somewhat although we are not anywhere near normality and some banks are still finding it hard to raise money.

Steve_xx

dunstonh wrote: »

Effectively it isnt the banks money that is being lent.

I agree, so let's hope that in future that the banks will remember whose money that they are dishing out to borrowers at absurd multiples of the borrowers earnings, on self-certified mortgages, on an interest only basis and without any formal reference as to what vehicle the borrower has in place in order to pay off the initial loan when the day of reckoning arrives.

flynnhelen

Steve_xx wrote: »

My friend received a letter from A&L today. They had charged him £295 to exit his mortgage and they have refused to refund any of the charge, saying that he changed product in 2004 and that as he had done so he would have received a notification of the new exit fee.

Is it worth his while pursuing it on the grounds that the fee is excessive for the work undertaken?

Hi,

I was told the exact same thing but sent another letter saying that it may have been in the contract (hidden in the small print) but is still excessive and unless I got a full breakdown of every cost I would take them to the small claims court etc. (See my post under your original one).

Within a week I was refunded the whole amount of £295. Not bad for 2 letters! Just be really firm and tell them you want the whole amount.

I included the following:
It is unlawful at common law, and under statute and consumer regulations, to impose charges in standard, pre-written contracts without making it clear what the charges are for. Furthermore, the charges must be fair, not penalties. Unless you can prove that these charges are a fair reflection of your administrative costs, I require full repayment of these charges.

Good luck!:rotfl:

dunstonh

I included the following:
It is unlawful at common law, and under statute and consumer regulations, to impose charges in standard, pre-written contracts without making it clear what the charges are for. Furthermore, the charges must be fair, not penalties. Unless you can prove that these charges are a fair reflection of your administrative costs, I require full repayment of these charges.

None of that is correct or accurate though. Its just cheaper for them to pay you rather than fight their corner. You are just making it more expensive for other customers who dont try and blackmail the lenders.

Steve_xx

flynnhelen wrote: »

Hi,

I was told the exact same thing but sent another letter saying that it may have been in the contract (hidden in the small print) but is still excessive and unless I got a full breakdown of every cost I would take them to the small claims court etc. (See my post under your original one).

Within a week I was refunded the whole amount of £295. Not bad for 2 letters! Just be really firm and tell them you want the whole amount.

I included the following:
It is unlawful at common law, and under statute and consumer regulations, to impose charges in standard, pre-written contracts without making it clear what the charges are for. Furthermore, the charges must be fair, not penalties. Unless you can prove that these charges are a fair reflection of your administrative costs, I require full repayment of these charges.

Good luck!:rotfl:

Yes, thanks for the information. I did make a later posting regarding this. My friend wrote to them again and told them that he thought that the charge was unreasonable. He asked for a full breakdown of what the charges levied were for. He told A&L that if, when he received this detail from them, he felt that the charges were excessive, that a claim would be started in the County Court in order to recover some or all of it. This seems to have done the trick and the full £295 has been refunded without more ado.

Clb3718

Hi all

I have had a mortgage with the Woolwich for 35 years, then a few years ago they switched to Barclays. I was charged the MEAF for this. Then I remortgated with the Barclays borrowing £10,000 three times about a year apart from eachother. Each time I was charged £275 for this as they had to cancel the old mortgate and set up a new mortgage (have no clue why?). I have just called them and they said that this fee was stated on my Mortgate was correct at £275, I asked them to justify this fee and she couldnt tell me a thing.

Eventhougth I have signed the Mortgage application stating a fee of £275 can I ask for a refund because they cant justify their fee and because it is way too costly?

Sorry I am 23 and am on a joint mortgate with my dad so sorry if I dont know what im talking about but hopefully it makes some sense.


Hope you all had a great weekend!

Thanks
xxxxxxxx

Steve_xx

Clb3718 wrote: »

Hi all

I have had a mortgage with the Woolwich for 35 years, then a few years ago they switched to Barclays. I was charged the MEAF for this. Then I remortgated with the Barclays borrowing £10,000 three times about a year apart from eachother. Each time I was charged £275 for this as they had to cancel the old mortgate and set up a new mortgage (have no clue why?). I have just called them and they said that this fee was stated on my Mortgate was correct at £275, I asked them to justify this fee and she couldnt tell me a thing.

Eventhougth I have signed the Mortgage application stating a fee of £275 can I ask for a refund because they cant justify their fee and because it is way too costly?

Sorry I am 23 and am on a joint mortgate with my dad so sorry if I dont know what im talking about but hopefully it makes some sense.


Hope you all had a great weekend!

Thanks
xxxxxxxx

You have had a mortgage with Woolwich for 35 years, yet you're aged 23. That's rather more fanciful than the banks mortgage exit charges!

Clb3718

Haha

My mum was originally on the mortgage but we moved house and remortgaged and she didnt have a job so I had to go on the mortgate but I couldnt be bothered to explain the whole story.