Mortgage Exit Fees successes and failures

Ruth

Steve_xx wrote: »

Yes you're right, the system certainly does need to change to prevent this. The simplest way for this to be changed is for the banks to stop levying these underhand charges to an unsuspecting public.

Yep, let's dumb down mortgage products so all fees are charged up front, and therefore it's even harder for FTBs to afford to buy their first home.

£295 MEAF on redemption, or £295 extra up front fee?

Obviously the latter is better.

Er, not.

Balfourwine

We have had a mortgage with the abbey for 4 years, the fixed rate expired and I let it run on variable interest rate until I received a letter saying we could get a good tracker rate for no cost and just to call. We have been in a bit of a fix financially for a while and had decided to sell the house just before this letter arrived, we are downsizing and easing our debt problem from the equity in our current house. I called the Abbey and said that before I went onto the tracker would I have to pay any redemption fees if we sold our house and bought a cheaper property, I was told that there would be no redemption just a small percentage fee to port the mortgage over if it was a lesser amount and none if it was the same or greater borrowing. This settled me and I went for the new rate and saved nearly £200 a month for 3months, however shortly after signing for the new rate we sold our house and started looking for a new one,put an offer in, applied to the Abbey to port the mortgage over, went through a whole new application and because of our poor credit rating/debts which we are paying off during the move, we have been refused the mortgage and now face have to pay nearly £5000 in redemption fees as well as not being able to get a mortgage and having no new house to go to. Is there going to be any possibility of claiming back the redemption fees because of false promises/not checking our credit rating when doing the new rate, or will we have to accept this, has any one else managed to reclaim their fees back because they have been missold a mortgage.

MarkyMarkD

You weren't mis-sold anything.

All mortgage advances are subject to underwriting. Portability is subject to underwriting.

Switching products isn't underwritten because you aren't borrowing any more money ... so there's no need to do so.

So, if you switch products - and get yourself tied in - and then wish to port the mortgage, it's not mis-selling if you then can't port because you are a bad credit risk.

Steve_xx

Ruth wrote: »

Yep, let's dumb down mortgage products so all fees are charged up front, and therefore it's even harder for FTBs to afford to buy their first home.

£295 MEAF on redemption, or £295 extra up front fee?

Obviously the latter is better.

Er, not.

Neither is preferable.

dunstonh

Is there going to be any possibility of claiming back the redemption fees because of false promises/not checking our credit rating when doing the new rate, or will we have to accept this, has any one else managed to reclaim their fees back because they have been missold a mortgage.

No false promises and no mis-sale. Portability is always dependent on the lending criteria in place at the time of the new mortgage.

MarkyMarkD

Steve_xx wrote: »

Neither is preferable.

Yes, but when you come back from la-la land, mortgage lenders need to make a profit.

They don't care whether they charge fees up front, or at the end, as long as they get them.

But buyers may be far more capable of paying at the end than at the front, which is why it is better to have higher MEAFs and lower initial fees.

All of this is rather academic anyway. The basic point is that most of the MEAFs described on this thread were clearly and fairly described up front, so weaselling out of paying them is simply dishonest.

Steve_xx

MarkyMarkD wrote: »

Yes, but when you come back from la-la land, mortgage lenders need to make a profit.

They don't care whether they charge fees up front, or at the end, as long as they get them.

But buyers may be far more capable of paying at the end than at the front, which is why it is better to have higher MEAFs and lower initial fees.

All of this is rather academic anyway. The basic point is that most of the MEAFs described on this thread were clearly and fairly described up front, so weaselling out of paying them is simply dishonest.

You obviously work for, in, or have connections with this industry. Therefore you are at an advantage.

The common view here is that these charges are extraneous at least and underhand at worse. They are confusing and frustrating and they serve only to make it difficult for customers to make easy comparisons between products on offer. The charges are purposely designed to trap and retain customers and in that sense they are unfair.

I'm clearly aware of your views and those of your few cohorts on here. We have had many exchanges here about them and we are used to being told that in asking for our money back that we are blackmailing the banks. This is rich coming from an industry that today would not exist without the majority of us propping it up.

In general I disagree with your take on it and my mind is not about to be changed. Except to say that I do agree with you in that mortgage lenders need to make a profit. However, given the experience of the last two years, and despite their dubious charges, they still need to be propped up by the taxpayer. Clearly they have some way to go before they learn the lessons of sound banking practise.

dunstonh

The common view here is that these charges are extraneous at least and underhand at worse.

You mean the uneducated view is that. Many people realise that the lenders package their fees in different ways. We see it in the main threads where you get people comparing deals and they put the fees at the start and the fees at the end. The A&L used to be marketed on the fact that the fees at the start were low but higher at the end but you didnt pay them at the end if you rolled into a new deal with them. Nothing wrong with that.

we are used to being told that in asking for our money back that we are blackmailing the banks.

Asking back what you are entitled to is fine. Indeed, its not fine, the banks should have paid back the money automatically. However, its when you blackmail them into paying back more because you know it will cost them more to argue their case that is not right.

However, given the experience of the last two years, and despite their dubious charges, they still need to be propped up by the taxpayer.

What about the experience of the previous 13 years when the vast majority saw their living standards rise and the Govt sucked in all the tax paid by the banks (but being Labour not only spent it but then borrowed more). Even with the recession and the need to reduce debt, the vast majority of people are still financially better off than they were before the credit boom.

Yes they could have done better. Yes they are wrong in the way they do things in so many areas. However, that doesnt make blackmail acceptable. Given the number of fraudulent and try-it-on claims there is pressure to change the complaints system. Every blackmail attempt, every fraudulent claim or try-it-on claim is just going to increase that pressure and the ones who will be worse off are those with the genuine complaints.

MarkyMarkD

Thanks, Dunston, for making those points most of which I agree with, and saving me the typing energy!

Steve - around half a dozen mortgage lenders (or groups thereof under common management) have been rescued with government funds. That's out of hundreds of lenders across the industry. Most of those which made mistakes have simply "sucked it up" themselves and paid for the problems out of their own reserves. The government funds are not a gift, either, they are an investment which will be recouped with profit in due course. Honestly, it's not very relevant to your argument.

A&L (quoted by Dunston) is the best example of this. They had products with far lower up-front fees than some other lenders (e.g. Northern Rock) and they had a higher MEAF at £295. But the MEAF wasn't payable if you switched product; it was only payable when you eventually redeemed. I have paid A&L two different MEAFs in my life and I didn't have any complaint at all about the £295 one - because it was clearly disclosed in the KFI when I bought that mortgage, and the mortgage considered as a whole was good value.

For people to buy a mortgage with their eyes open, because it gives them best value from start to finish including the MEAF, and then weasel out of the MEAF is dishonest.

For people to buy a mortgage on the basis of one MEAF, and then to be charged something far higher, is a different matter and that is why there was an FSA ruling against this practice. But it didn't say that a £295 MEAF was inherently invalid - because it's not - nor that all MEAFs should be refunded - because they shouldn't.

FOS still has ridiculous turnaround times, for genuine complaints, because it is swamped with nonsense claims like the ones people are encouraged by steve_xx (and others) to make even though the correct, legally binding, MEAF has been charged.

pays_to_complain_2010

I used template letter to complain about the mortgage exit fee of £295 when we left allliance and leicester mortgage, almost straight away recieved a letter today with a cheque for £256.51. Success!! didn't think they would back down so easily but they did !!
Thanks Martin:beer: