Mortgage Exit Fees successes and failures

tbones1957

Have just got two mortgage exit fee repayments! My former partner & I had a mortgage with A & L & switched to Abbey in 2004. We then switched to Skipton in Dec 2006. After 1 letter to A & L, I had £32.38 credited to my santander bank account within 2 days. I had a reply from Abbey within 7 days & was asked to fill in a form in joint names. I was told that any cheque would be in joint names. I received a cheque for £126 within 1 week. I called in the local branch to ask how to cash it, and they said it would have to be a joint account. I then phoned the complaints department & was told to return the cheque & a new one would be issued in my name if my partner signed a letter agreeing. Yesterday the cheque arrived in my name. Luckily we are still on good terms so we split the money £79.19 each. Not bad for two stamps and a phone call! Thanyou moneysavingexpert!

chefyboy75

Hi can anyone help me? I had a northern rock together mortgage in 2008,which started in dec 2005, rang them to ask what my interest rate would possibly be when i came to the end of my fixed rate period, was told the price of my mortgage would be going up from £900 to nearly £1200 a month which we couldnt afford so had no choice but to put my property on the market.
Applied for another mortgage with them, was provisionally accepted but the sale of my property fell through. Sold again and went to apply for a mortgage but was then told we couldnt have one with northern rock at that point so had to go to halifax. we sold the house 5 months before the end of the fixed term and got stumped with an erc of £3795. Once we had moved we received a letter from northern rock saying they had mis-calculated and we owed them a shortfall of nearly £700 which we then had to pay.
So we no longer had a mortgage with them but because our loan was no longer tied in the payments shot up from around £170 to £360 a month.
I have now been informed that NRAM as they are now called have scrapped the erc and are repaying them back to customers who can prove they couldnt get another mortgage with themselves, now we dont have a mortgage with them but are still customers due to the loan that was actually tied in. We also have a portfolio from when they were northern rock and it states that once a northern rock customer they virtually guarantee to always be able to offer you a mortgage!! Are we entitled to claim the erc back? We were basically forced to sell our house as northern rock refused to help us out and just feel a bit annoyed that after all the trouble weve had with them, and the obvious that as taxpayers we had to bail them out that this with the erc being waivered is just about the icing on the cake!

dunstonh

We also have a portfolio from when they were northern rock and it states that once a northern rock customer they virtually guarantee to always be able to offer you a mortgage!

That became void once NR ceased to exist.

Are we entitled to claim the erc back?

Generically no. You chose to move. They didnt force it. Unless you meet the criteria for the NRAM refund.

We were basically forced to sell our house as northern rock refused to help us out and just feel a bit annoyed that after all the trouble weve had with them, and the obvious that as taxpayers we had to bail them out that this with the erc being waivered is just about the icing on the cake!

They didnt force you. You took on a mortgage you couldnt afford. I know thats the harsh way of putting it but it is the factual way. You then made the choice of selling up and taking the hit. Not being funny but a mortgage increase of £900 to £1200 is nothing. If you couldnt afford that then you may actually have a case against the mortgage adviser as you typically plan to be able to afford up to around 50% above the long term average rate. We havent had rates above the long term average for a very long time. So, you lack of affordability could be a bad advice issue. Although it could equally have been that the right advice and info was given and you ignored it.

Bottom line is that the ERC is only refundable if you meet the NRAM criteria.

chefyboy75

We were forced to sell as NR refused to help us in any way shape or form, the mortgage being £900 we could afford but when we were being threatened with £1200 thats when we couldnt afford it and that was 3 years almost down the line! We explained all of this to NR but they were not the slightest bit interested and wouldnt accept lower monthly payments so we could stay in a home that we very much loved being in. With regards to £300 being nothing, I beg to differ, when you are a young family that can feed and clothe your children for a month so £300 may not be much to yourself but it was to us. We didnt want to move home and are still upset about the fact we had to and its another 3 years later!
What exactly would the NRAM criteria be then?

dunstonh

With regards to £300 being nothing, I beg to differ, when you are a young family that can feed and clothe your children for a month so £300 may not be much to yourself but it was to us

I'm afraid that is just where you went wrong. An increase of £300 on a £900 mortgage payment is not a lot and should have been within your budget. Especially when you consider that the £1200 would have been below the long term average rates. No-one likes increases but you know that in a typical 25 year mortgage there is probably going to a period when rates are a lot higher. The years you mentioned didnt have high rates but you still couldnt afford the standard variable rate.

There is little NR could do for you because you clearly over extended yourselves. They cannot perform miracles. This is why mortgages come with risk warnings.

It's not a nice situation you found yourself in but it was a predictable one. It was always going to happen from the minute you bought the house. It was inevitable. Hence why you may have a case against the mortgage adviser if you used one.

The NRAM ERC refund FAQ is here:
http://www.n-ram.co.uk/customers/mortgages/existing-mortgage-customers/~/media/Files/N/N-RAM/content/ERC-Waiver-QAs3.pdf

There is a contact telephone number in there.

chefyboy75

I'm afraid we will have to agree to disagree on this, was the recession predicted also as we most certainly would have been able to stay in the house as the mortgage would have dropped to less than £500! Who do I complain to regarding that then?!

dunstonh

was the recession predicted

Yes. Timing and degree of the recession was not. However, anyone assuming there would not be a recession was living on a different planet. Recessions occur typically every decade. There have been 8 financial crisis since 1956 (average of every 7 years). We just had a longer gap than normal this time. On a 25 year mortgage you will typically see 3-4 recessions and/or financial crisis.

Interest rates at the long term average is around 7.5% p.a. If we look back 25 years you would have seen a range of around 2% to 15%.

When your mortgage went up to £1200 it would have been under the 7.5% long term average. You were taking a massive financial gamble by hoping that mortgage rates would not only stay lower than the long term average but would also stay around half that level. That was never going to happen and therefore was predictable.

Who do I complain to regarding that then?!

if you sought mortgage advise and the adviser failed to make you aware that the mortgage rate you were paying (when it was cheaper) was not the norm and that you should budget for higher amounts then you could have a case against the mortgage adviser.

However, the key features illustrations that are issued back then usually did show the monthly mortgage payments as they would be at the standard variable rate they would be if you were not on a deal. So, the information was in there with the risk warnings. The versions you get today are better as they use a higher rate reflecting the long term average better.

chefyboy75

Have looked at my original documents and it says that the interest rate after my fixed term ended should have been 6.59% and would stay that for the remainder of the loan term. The amount we were paying whilst fixed was 5.99%.
It then goes to say the following:
"We will only increase our standard variable rate if there has been, or we reasonably expect there to be in the near future, a general trend to increase interest rates".
Once we had moved we hit recession and the interest rate dropped!
This is all from Northern Rock but were were actually sold the mortgage by a broker called Fiducia. Where do we stand with all this?

dunstonh

Have looked at my original documents and it says that the interest rate after my fixed term ended should have been 6.59% and would stay that for the remainder of the loan term.

That would be very unusual. Are you sure it doesnt say it will be on the standard variable rate for the rest of the term which is currently 6.59%? The rate itself would not be fixed.

So, the SVR may have been 6.59% when you took the mortgage out but something like 7.5% at the end of the deal.

This is all from Northern Rock but were were actually sold the mortgage by a broker called Fiducia. Where do we stand with all this?

The broker has to ensure the mortgage is suitable for you and ensure it is affordable both immediately and the foreseeable future. From what has been said, its clear that the mortgage was not affordable once the deal ran out and as mortgage rates have not been high in the last decade then it could be argued that the mortgage should not have been recommended to you. You would complain to the broker.

However, you do need to be aware that the broker is not responsible for the final decision to borrow the money. If they have given the appropriate warnings and you still proceed then you take on the personal responsibility. You lack of understanding that the rate would go higher later in the mortgage term indicates that possibly the broker didnt give you the right advice. The ability to prove that though could be the snagging point.

chefyboy75

It definitely states the above as the interest rate, so is it nothing to do with northern rock? am a little confused now!
It was the company that recommended northern rock as they did the 125% mortgage so we could tie in 2 loans we had with seperate lenders