Mortgage Exit Fees discussion

Bernard_Coleslaw

pmclondon wrote:

The discussion here centres around whether the actual MEAF is greater than the original MEAF.

However, if the exit fees charged are in principle excessive/ unfair and overstate any administration involved (similar to the issue with overdraft fees), it may be that these can be challenged under unfair contract terms legislation. If so, then does the same apply to application fees (as opposed to arrangement fees)?

What do people think?

This isn't the tack the FSA are taking at the moment. Exit fees are not penalties for breach of contract (a la default charges on overdrafts) so I don't think this is a case that's been proven yet.

MarkyMarkD

scoop1971 wrote:

Hi. First post, so be gentle.

I've skimmed many of the posts but haven't seen anything on this subject...

I have been charged the exact exit fee they said I would so no come back there. However, has anyone tried reclaiming charges based on the fee being excessive, as opposed to being hiked up during the mortgage term (I've read somewhere the estimated real cost of closing an account is £35)?

Also, should we not also be adding a charge for lost interest on to these claims, since in effect we have lost out on interest on money that should have been in our acount?

There is no case for what you are suggesting.

The bank charge recovery claims are based on the charges being an unfair penalty for breach of contract. Whilst I don't accept the legal arguments being put forward, at least I can see how people think there is such an argument.

Mortgage product fees or exit fees (MEAFs) are NOT penalties for breach of contract. Product fees are an agreed charge to obtain the loan. Exit fees (if charged at the rate specified in the original mortgage offer) are an agreed charge to obtain the loan, but paid at the end and (sometimes) waived if you keep the loan for its full original term. Neither of those can be construed as penalties IMHO. The product fees absolutely 100% cannot be thus construed.

As regards the interest, the FSA didn't require interest to be paid so some lenders are not paying it. There is no (established) legal basis for a challenge to increased MEAFs and therefore no (established) legal basis for recovering interest as well as the amount involved.

If you want to pursue a lender for the £8 or £30 of interest involved, feel free. But I wouldn't guarantee winning given that the lender can point to their full compliance with the FSA's ruling.

Financial_Savvy

Alliance & Leicester original fee £150
New fee £295
Complained at time and got it to £225

Can I claim the difference (225-150=£75) ????

Bernard_Coleslaw

Financial_Savvy wrote:

Alliance & Leicester original fee £150
New fee £295
Complained at time and got it to £225

Can I claim the difference (225-150=£75) ????

I would think so, yes. Give it a go.

scoop1971

MarkyMarkD

Thanks for your reply, but it seems there are some who think there are grounds for reclaiming money on grounds of excessive charges (similar argument to bank charges, I presume). This is from thisismoney.co.uk

"Secondly you can also complain simply because you feel the fee you paid was too high. Rather than let you take the matters to the Financial Ombudsman or the small claims court, the bank may simply pay you back some of the money. The true cost of closing a mortgage is estimated to be £35."

However, I am unaware of anyone who has tried this!

Bernard_Coleslaw

scoop1971 wrote:

MarkyMarkD

Thanks for your reply, but it seems there are some who think there are grounds for reclaiming money on grounds of excessive charges (similar argument to bank charges, I presume). This is from thisismoney.co.uk

"Secondly you can also complain simply because you feel the fee you paid was too high. Rather than let you take the matters to the Financial Ombudsman or the small claims court, the bank may simply pay you back some of the money. The true cost of closing a mortgage is estimated to be £35."

However, I am unaware of anyone who has tried this!

Thing is, if it's a toss-up between what the FSA have said, and what some reporters for the Daily Mail have said, the FSA wins for me, hands down.

Burty

MarkyMark - thanks for your reply. Trouble is I come from a daft generation that trusts the banks and it is only reading stuff on this site makes you realise how stupid you've been in blndly accepting "fees" - I will be more careful in the future!
Burty

MarkyMarkD

I can only agree with Bernard. This is Money have no basis for what they have reported on that - the FSA's rulings clearly said that there had to be no connection to "actual cost" and the FSA's spokesman reiterated this when interviewed on Radio 4's Moneybox programme.

jw08668

We am repaying our mortgage 9 months early (with Cooperative Bank) as we are emigrating to Australia. We are being charged £6,597. Unfortunatly a repayment penalty clause of 3% was in the contract. Is their anyway we could claim that this amount is unfair ? I have called the Cooperative Bank twice but they have stated that we signed the contract with this clause and as such we have no right to expect a refund.

sleepless_saver

Just redeemed mortgage with Abbey (28 Feb) and they only charged £95 redemption fee rather than the expected £225. I didn't need to do anything :beer: