Mortgage Exit Fees successes and failures

MarkyMarkD

The fact is that A&L's overall mortgage deals - including their £295 MEAF - were better value than most other lenders at the time they were offered. They have said in their own responses to challenges about the MEAF - on the radio, and in the media - that it's wrong to look at a single element of the cost of a mortgage. The overall cost is what matters.

It's irrelevant whether this bit, or that bit, of the mortgage process "costs" the lender £x or £y.

Some lenders do products with no up-front fees, and other products with £2,999 up-front fees. Only a moron would assume that the £2,999 fee product "costs" them any more to set up.

Similarly with exit fees. One lender offers products with a £295 MEAF, and a good rate. Another lender offers products with no MEAF, and a poorer rate. How on earth is it fair or right to take the cheaper product, and then refuse to pay the MEAF two years down the line. 'Cos that's what people are doing.

I've had an A&L mortgage. And I've paid them a £295 MEAF. And I wouldn't have dreamt of challenging it - because it's what I signed up to.

I currently have a Woolwich mortgage with a £250 MEAF which applies even if you port the mortgage (which I will when I move house, because it's lifetime BBR+0.79%). I'm not delighted about it, but once again I wouldn't dream of challenging it - I signed up to it.

But equally well I've had MEAF refunds from both A&L (on a different mortgage) and Yorkshire Building Society, because both of them increased their MEAFs and that was not acceptable per the FSA ruling.

pixxyco

If you take a mortgage out for 25 years, most people are assuming that they will stay with that provider and the exit fees do not concern them, they are looking at the up front fees and the interest rates.

The arguments about how different mortgages are costed doesn't add up. I'm remortgaging with First Direct on a life time tracker at +0.79 :j, with no up front fees at all - it hasn't cost me a penny - and their exit fee is £150 with no redemption fees. They must still be making money, so how can some banks charge so much other than to make even more money.

Basically at the end of the day this site is about saving money. It makes interesting reading the people who get upset because people are getting back money, but who cares, the big companies don't waste any time in stitching us up (have all passed on rate cuts), so good on us if we get a little bit of revenge.

dunstonh

The arguments about how different mortgages are costed doesn't add up.

Except it does.

I'm remortgaging with First Direct on a life time tracker at +0.79 :j, with no up front fees at all - it hasn't cost me a penny - and their exit fee is £150 with no redemption fees. They must still be making money, so how can some banks charge so much other than to make even more money.

That mortgage doesnt require much, if any advanced planning and financing. You cannot compare it to those that do.

Basically at the end of the day this site is about saving money. It makes interesting reading the people who get upset because people are getting back money, but who cares, the big companies don't waste any time in stitching us up (have all passed on rate cuts), so good on us if we get a little bit of revenge.

Where does it stop though? How long is it before similar tactics are aimed at the small local businesses? Many of the posters here will be self employed or work for small businesses and how would they feel if trying on tactics like this are was to be done on them.

There is no issue at all with claiming back valid fees. Playing blackmail will harm the innocent. Just on the FOS point, there have been calls for consumers to pay to complain to try and reduce the number of fraudulent or try it on complaints. These sorts of tactics encourage that point of view and it will be the genuine people that will lose out.

pixxyco

We could go on and on about this, but in my case putting it simply it is like this:

I took out a mortgage with Northern Rock in 2005 with every intension of staying with them for 25 years. They have since gone titty up due to their stupidity, and have decided they don't want my business. Either I remortgage or stay with them paying a high SVR. If I remortgage they are charging me £250 for the pleasure, even though it apparantly costs no more than £50 to close the mortgage (as stated on this website), so why shouldn't I ask what the extra £200 is for - especially as they are basically forcing me to move. They have sent me 3 letters offering me the chance to remortgage with C&G as they want me gone - are they earning commision on this?

So why should I pay for NR stupidity, either by staying with them on a high SVR, or paying an excessive exit fee because I'm having to remortgage to get a fair deal. (I've had one mortgage on a property for 18 years with the same provider because it has never been worth moving to another lender).

I think that perhaps you a being a little nieve about the mortgage charges "That mortgage doesnt require much, if any advanced planning and financing. You cannot compare it to those that do.", especially as you a financial advisor. If you compare the mortgages on the market you will see (and you should know) that generally the up front fees being charged are nothing to do with cost and planning, but solely profit, with the idea that people go for the cheapest rate and tend to ignore the fees. This is of course dependant on what you want to borrow, but if it's below 100k then you may not be making the best choice in paying high fees for a discounted profit.

I'll let you have the last say on this as I have better things to do, like penning a letter to NR, but anybody remortgaging at present should do a spread sheet calculating what they will be paying over the next 5 years, and then they'll see that my paragraph above rings true!

dunstonh

I think that perhaps you a being a little nieve about the mortgage charges

I have a degree in economics and have been doing this for over 20 years. Packaging of product charges is often discussed in financial press and within the industry. The information on pricing of mortgage products is not a hidden secret.

If you compare the mortgages on the market you will see (and you should know) that generally the up front fees being charged are nothing to do with cost and planning, but solely profit, with the idea that people go for the cheapest rate and tend to ignore the fees. This is of course dependant on what you want to borrow, but if it's below 100k then you may not be making the best choice in paying high fees for a discounted profit.

That is not the case. Some lenders have appeared to try that (intelligent finance had one earlier in the year that was clearly a profit excercise) but with most its a case of deciding where to take their profit. Either on the rate or the charges. Some lenders have actually run their deals at virtually no profit with the view that they can aim to cross sell in branch.

MarkyMarkD

High fee products are offered because some borrowers like them, not because borrowers are stupid and buy on the rate and ignore the fees.

Having said that, there are doubtless borrowers who prefer to pay more overall for the pleasure of having a lower rate - and hence lower monthly payments - whilst adding a large fee onto their capital balance. Whether that makes them stupid depends on your perception.

jules8691

Wrote a letter to West Bromwich Mortgage Company, who we left in 2004. I am astounded to have received a cheque in "full and final settlement" for............... wait for it .........................
£325.00........ Don't just sit there write that letter ! ! ! ! :beer: :j

MarkyMarkD

What on earth is the West Bromwich Mortage Company? Any relation to the West Bromwich Building Society?

jules8691

Is related to the West Bromwich Building Society, they are at the same address. I think they give mortgages to people who have problems getting a mortgage, and charge them more for the privilege............ proof in the pudding I think with the amount we were charged

polka.dot

C&G recently charged me £225 admin fee for closing the mortgage account, so I wrote to them using Martin's template and asking for the justification of the fees or a refund. Today I got a cheque for £45.13 and a letter explaing that it consists of £45 difference between what they charged me and what was in the contract (£180) plus 13 pence interest.

No explanation of what the closing fee consists of - so in effect, my query remains unanswered.

Shal I accept the cheque or carry on demanding a breakdown of the fee?

Thanks in anticipation!