Mortgage Exit Fees successes and failures

Steve_xx

justwondering01 wrote: »

Hi,

I was charged £3500 to come out of my mortgage early when I sperated from my partner at the time and I couldn't afford to pay the repayment mortgage on my own. So I came out of the mortgage agreement that we took up to go onto an interest only mortgage while i was waiting for the house to sell. Are this charges able to be reclaimed?

This thread is relating more specifically to the fees that banks charge for exiting an ordinary mortgage, as opposed to a fixed rate period mortgage.

It seems to me that your mortgage may have been at a fixed rate for a period of time and that because you needed to break the contract before that period lapsed they have imposed a penalty fee on you. I wouldn't think that if this is the case, that you would be able to recover any of it.

dunstonh

I was charged £3500 to come out of my mortgage early when I sperated from my partner at the time and I couldn't afford to pay the repayment mortgage on my own. So I came out of the mortgage agreement that we took up to go onto an interest only mortgage while i was waiting for the house to sell. Are this charges able to be reclaimed?

No. These charges are legal and fair. The special offer terms you requested require the lender to arrange financing which costs them. Especially if you pull out early. Hence the early repayment charge. There are no grounds to have this charge reclaimed.

Chumpledina

I took out a mortgage with Alliance & Leicester in August 2004, which I repaid early when I switched to another lender at the end of my discounted rate in September 2006. I was charged £295 as a redemption administration charge. At the time, I was quite miffed about this, as I did not recall having been told about the charge when I took the mortgage out. However, I did nothing about it.

Having discovered Martin's excellent site, I dug out my old mortgage documents and discovered that the leaflet that I had (which was the only document referencing an early closure administration charge) showed a fee payable of £195. I wrote to A&L on 13 October, including the facts relevant to my case, but using the template for the more militant approach and requesting repayment of £295 plus interest (the justification to myself for asking them to repay the total rather than just the £100 being that I felt this had never been properly explained to me).

I received a reply dated 22 October enclosing a cheque for £295 as a gesture of goodwill. The letter states that the charge actually increased to £295 in August 2004 before my mortgage was advanced to me, so legally I am probably entitled to nothing and have really been very lucky to receive a full repayment. I do feel slightly guilty about this, but not enough to return the cheque! My claim was genuine and in good faith and had the documentation I was given when I took the mortgage out stated that the fee was £295, I would not have sent the letter. I think that A&L were at fault therefore for not ensuring that I was informed of the updated fee before I took the mortgage out. I also don't think the fee was explained properly, but this was perhaps the fault of my mortgage broker - with whom I was not very impressed over a couple of other points on the mortgage that he had not explained - rather than A&L.

MarkyMarkD

Steve_xx wrote: »

Just a minute. These banks have just received a multi billion pound bailout from the UK taxpayer as a direct result of their appallingly reckless bahaviour. Who's blackmailing who here?

Alliance & Leicester haven't. And it's them that the query related to.

And Steve_xx, why in post #2741 do you refer to charges in excess of the amount agreed, when in almost all the other posts including your own #2743 you refer to charges in excess of what you consider reasonable?

The only reason I can imagine is that the only legal or regulatory basis for a claim is that the amount charged is more than the amount originally agreed. Any other claims are based on wasting the lender's time until they pay up just to get rid of the inconvenience - i.e. what Dunstonh calls "blackmailing".


Chumpledina - if you took out your mortgage in August 2004 (slightly before mortgage regulation which was effective from 31 October 2004) it is possible that it wasn't entirely obvious to you that the exit fee would be £295. Had it been post-mortgage regulation, the mortgage offer would have had to be reissued to effect the increase in the MEAF. I think that in your circumstances, they should morally and legally have refunded £100 but no more.

MarkyMarkD

Steve_xx wrote: »

This thread is relating more specifically to the fees that banks charge for exiting an ordinary mortgage, as opposed to a fixed rate period mortgage.

It seems to me that your mortgage may have been at a fixed rate for a period of time and that because you needed to break the contract before that period lapsed they have imposed a penalty fee on you. I wouldn't think that if this is the case, that you would be able to recover any of it.

I've thanked you for this response as the sentiment is right, but the words aren't.

Repaying a mortgage early isn't "breaking the contract", it's exercising an early repayment option which the mortgage allows. That option has an early repayment charge associated with it. Because it isn't "breaking the contract" it isn't a penalty.

If it were a penalty, for breach of contract, then the cost would be limited to the lender's unavoidable costs. As it isn't a penalty, the ERC can be whatever the lender likes.

samanthasaunders

hi,

I wrote to the Abbey just 2 weeks ago regarding reclaiming our mortgage exit fee. We changed lender in 2006 and were charged £225 to exit abbey. Within a couple of days they sent me a form to fill in and today i have received a cheque for £126!!!! Our contract stated we should only pay £99 so they have sent us the difference. I really cant believe how easy it was to reclaim, its really worth a go. Good luck.

sienna-mary

Hello.
I sent a letter to Alliance & Leicester just 2 weeks ago about their exit fee. (I was sceptical & thought it would be alot of arguing) I didn't even know my old mortgage number as I had distroyed all the paperwork so I was very surprised & delighted to recieve a settlement cheque for £220 - no quibble!

Hinch

I had a second morgage/secure loan with GE Money Home Lending I had to pay an exit fee but no sure how much it was. Can you claim back the exit fee from this type of morgage? Has anyone claimed an exit fee from this company?

_Andy_

Hinch wrote: »

I had a second morgage/secure loan with GE Money Home Lending I had to pay an exit fee but no sure how much it was. Can you claim back the exit fee from this type of morgage? Has anyone claimed an exit fee from this company?

If what they charged you is what you agreed to in the loan agreeement there is nothing to claim back.

Hinch

I will have to look at the paper work I have and then write to them and ask how much they charged and a breakdown of there charges, then go from there. Should they of sent me a final statement?