Mortgage Exit Fees successes and failures

mark55man

Clangers wrote: »

I read your article on redemption fees last week and wrote off using your template to Alliance & Leicester. I paid £295 for an early closure administration charge. They replied straight away, paying back £255 for the difference between the fee in place at the time we took out the mortage and the current rate, plus on year's interest calculated at 8%. Total refund was £275.40 !

Thank you very much for your advice, success.

A&L have just written back to me saying that the £295 has been the price since I took out my 5 year fix - doh 5 years ago, so are saying they are not refunding anything. Can I ask when your mortgage was taken out, and whether they responded to your first letter

What is the normal step when they refuse to pay the difference, can I appeal about the size of the charge

dunstonh

mark88man wrote: »

A&L have just written back to me saying that the £295 has been the price since I took out my 5 year fix - doh 5 years ago, so are saying they are not refunding anything. Can I ask when your mortgage was taken out, and whether they responded to your first letter

What is the normal step when they refuse to pay the difference, can I appeal about the size of the charge

The FSA ruling is that they should return the difference between what was the price at the time you purchased the mortgage or the last deal (whichever is later) and what you paid on exit.

In your case you paid what it was when you bought the mortgage deal so you are not entitled to any refund as per FSA rules.

The exit fee was usually priced in conjunction with the overall deal (e.g. purchase price, rate and exit price). So, some deals had heavier exit prices but lower up front prices. There is no requirement for them to justify the charge is as it is not a penalty charge.

MarkyMarkD

Mark88man

Which precise part of the totally clear statement on your KFI that the exit fee would be £295 was unclear to you? And on what grounds is that £295 therefore unfair?

Steve_xx

mark88man wrote: »

A&L have just written back to me saying that the £295 has been the price since I took out my 5 year fix - doh 5 years ago, so are saying they are not refunding anything. Can I ask when your mortgage was taken out, and whether they responded to your first letter

What is the normal step when they refuse to pay the difference, can I appeal about the size of the charge

Write to them again as follows:

I am unhappy at your response and I want to pursue the matter further. It is well documented that the actual cost to a mortgage lender of closing down a mortgage is in general not in excess of £50. Therefore it is not reasonable for you to levy a charge in excess of that amount.

The charge is not fair, nor is it a reasonable one. In effect it is a type of fine, levied simply because I paid off my mortgage.

Please take this opportunity to review your decision. If you feel that you cannot move from the current position then you must provide me with a full breakdown of the charges you have levied for the discharge of the mortgage. If, as a result of your submission I feel that that those charges are unreasonable, then I will take appropriate action through the County Court in order to recover some of the charge.

mark55man

MarkyMarkD wrote: »

Mark88man

Which precise part of the totally clear statement on your KFI that the exit fee would be £295 was unclear to you? And on what grounds is that £295 therefore unfair?

come on - I wasn't MSE then, I didn't know !!!!!! a MEAF was.

mark55man

dunstonh wrote: »

...
The exit fee was usually priced in conjunction with the overall deal (e.g. purchase price, rate and exit price). So, some deals had heavier exit prices but lower up front prices. There is no requirement for them to justify the charge is as it is not a penalty charge.

just because it is clearly priced (if you understand the jargon) doesn't mean it was fairly priced.
clearly priced would have been admin costs £50, totally bogus and unfair charge, that is not strictly hidden, but is not transparent £245

dunstonh

clearly priced would have been admin costs £50, totally bogus and unfair charge, that is not strictly hidden, but is not transparent £245

The pricing would have been very clear. One of the few things that the FSA has done that is very good is the introduction of the KFI. This gives a simple, short document that outlines the terms in a key facts style. The charge was not hidden and it was very clear.

The size of the charge does not make it unfair. On that basis a £2000 television would be an unfair charge because you can buy televisions for £100.

Steve_xx

dunstonh wrote: »

The pricing would have been very clear. One of the few things that the FSA has done that is very good is the introduction of the KFI. This gives a simple, short document that outlines the terms in a key facts style. The charge was not hidden and it was very clear.

The size of the charge does not make it unfair. On that basis a £2000 television would be an unfair charge because you can buy televisions for £100.

If one goes into a shop and sees two television sets, one priced at £100 and the other at £2000, one can make a simple choice about which one to buy. A mortgage is quite different animal. One is presented with a sheet of A4 paper showing a raft of charges and percentages that are not as easy for joe public to understand as the difference in price between two tv sets, unless joe public happens to be a accountant.

Regardless of your argument about how fair it all is, the fact remains that the majority of the public feel that these charges are not fair and reasonable.

dunstonh

Regardless of your argument about how fair it all is, the fact remains that the majority of the public feel that these charges are not fair and reasonable.

The majority of the public are clueless monkeys when it comes to things that are not their area of knowledge. Doesnt make them right when have an uninformed opinion though.

If one goes into a shop and sees two television sets, one priced at £100 and the other at £2000, one can make a simple choice about which one to buy. A mortgage is quite different animal. One is presented with a sheet of A4 paper showing a raft of charges and percentages that are not as easy for joe public to understand as the difference in price between two tv sets, unless joe public happens to be a accountant.

How does that differ to any other area. Car needs servicing. If you know what to do then DIY. If you dont you get someone to do it. If you DIY and make a pigs ear of it then its your own fault.

A mortgage is a retail product. You are buying a product which has defined terms. The lenders fell foul of the FSA as they started making changes to those terms meaning that the didnt match the contract. That is why the FSA ruled as they did.

There used to a be time, not too many years ago, that you went to a solicitor who would explain the terms to you before you signed the contract. That doesnt happen much nowadays as people have chosen to reduce the cost of the solicitor (or not use one with remortgages) by not seeking their advice before signing a contract.

Steve_xx

dunstonh wrote: »

The majority of the public are clueless monkeys when it comes to things that are not their area of knowledge. Doesnt make them right when have an uninformed opinion though.

I'm sure that the majority of the public will be pleased at your assessment that they are "clueless monkeys".

Perhaps the banks also perceive that the public are "clueless monkeys". And, maybe it was this perception that lead the banks into thinking that they could get away with their unreasonable behaviour.