Mortgage Exit Fees discussion

MarkyMarkD

I think, to be fair to Martin, that the "original MEAF" is the FSA's terminology. But I have certainly read (either in the FSA press release or elsewhere) that it is the latest MEAF that you signed up to that matters, not the "original" MEAF.

MarkyMarkD

MSE_Martin wrote:

Thanks MarkyMark. Always nice to have your work slated in that style!

Actually the article does caution that waiting is a good option, yet I've been swamped with demand to do this now and would prefer to provide decent guidance on that. However your claim that I'm misquoting the FSA's advice isn't correct. The whole point here is the expectation from both the FSA and the CML is that the vast majority of lenders will revert to the old fee (possibly with RPI, but that in many cases is an almost negligible amount compared to the fee increases we've seen)

If you would like to hear the analysis from the horses mouth, please listen to this interview BBC Radio 4's Moneybox in which the FSA states the facts (i've also added it to the article as I think its very useful)

martin

Yes, sorry Martin for being a bit harsh. Consequence of posting after a beer or four.

I agree with you that few lenders are likely to apply RPI because of the small amount (of RPI) involved and the extra hassle of working it out. But the fact remains that no lender is guaranteed, at this stage, to rebate right back to the original amount and it's premature to be writing to them IMHO.

If people are clamouring for a proforma at this stage, they should just wait a month and calm down a bit.

AHAR

I knew that big pile of 'house-buying' documents would come in handy some day...
When I switched my mortgage from Halifax to Nationwide in Oct. '05 it appears Halifax charged a "Repayment Administration Fee" of £175. My original Mortage Offer from Halifax from July 2003 refers to a booklet for information on charges which lists the "Mortgage discharge fee" as being £75.
Interestingly I can see from a leaflet dated June 2004 that the fee was £100 then, and according to a statement from only a couple of months before switching, the fee was £150 in August 2005.

Money_Minor

If anyone is interested in the Halifax fees, the mortgage admin fees are £175 and £50 for a deeds despatch fee, so when you are looking at reclaiming the fees, it will only be up to the £175, not the £225 that Moneyfacts has provided.

Nothing worse than thinking you will get more than you think you will!

Hope this helps all your claims

:beer:

DavidWS

toonfish wrote:

it doesn't cover early redemption penalties, just increased closing fees.

Do you think the government will do anything about early redemption penalties?
We lost a lot of money through these fees. We had a mortgage with the Abbey National and decided to move to a bigger house. We applied for a new mortgage with the Abbey National and they refuse to give it to us. Thus forcing us to look elsewhere. We obtained one from the Bristol & West and then the Abbey levied massive charges on exit. We thought this was totally unfair in the circumstances. Through their actions, they had given us no choice but to look elsewhere. We tried to fight (using Which? Legal Service) but we lost.
Anyone have any comments?

Jackadee_2

I paid off my mortgage with Marsden Buliding Society a number of years ago but have always my buildings insurance with them until my renewal in Dec. when I found much better cover for far less money using Confused.com. After writing to the Society to cancel my bulidings insurance policy I am now being told I have to pay £95 to release my deeds as a "closure fee". Is this lawful? Who do the deeds belong to? and do I have to pay it??
Please help!

luckyfool

DavidWS wrote:

Do you think the government will do anything about early redemption penalties?
We lost a lot of money through these fees. We had a mortgage with the Abbey National and decided to move to a bigger house. We applied for a new mortgage with the Abbey National and they refuse to give it to us. Thus forcing us to look elsewhere. We obtained one from the Bristol & West and then the Abbey levied massive charges on exit. We thought this was totally unfair in the circumstances. Through their actions, they had given us no choice but to look elsewhere. We tried to fight (using Which? Legal Service) but we lost.
Anyone have any comments?

Abbey are on a slightly sticky wicket in some circumstances as their ERC's are calculated in a weird exotic formula on some of their mortgages where the ERC actually gets bigger the further into the deal you are, which is counter intuitive. There is some speculation that they may have problems justifying those penalties.

However in more general terms I can see why you lost your case. The bottom line is that the ERC's were in the original mortgage contract, and while Abbey mortgages are portable they do not guarantee that they will lend on the new property.

You could have missed mortgage payments, have developed a bad credit history, you could be wanting 10 times your income on a new mortgage, you could be wanting a mortgage on a dilapidated shed. There is no way they can guarantee that they will lend when you want to port the mortgage in the future. All they do say is that the mortgage is portable, but that both you and the property you port the mortgage to in the future, and the loan you request, would need to fit their criteria at that time.

I can understand that the scenario you faced is incredibly frustrating, but I really don't see any FSA intervention in this type of thing and legally the lender seems to me to be on pretty solid ground.

prudryden

MarkyMarkD wrote:

Like several of the earlier posts, this relates to an Early Repayment Charge (ERC), not a Mortgage Exit Administration Fee (MEAF) which is what Martin's article was about.

ERCs are completely legitimate and the FSA's ruling has no relevance to them. If you enter into a long-term commitment, like a 5 year fixed rate mortgage, you are committed for the 5 years. End of story. You have no basis to challenge the charge just because your girlfriend has dumped you. Sorry.

I understand that Martin is referring to both an ERC and an MEAF. If you have a normal variable rate repayment mortgage loan with a 25yr. life and you pay it off early as per contractual agreement, what does it matter if it is called one or the other? The implied definition of each is clouded anyway.

If you have a fixed rate agreement for a given number of years, then it is understandable that a penalty be charged should you wish to break that agreement.

Personally, I think it is a very good idea that Martin has initiated this action . Let's show the government, while they are considerating the new policy, that we are very concerned, not just passive about it, which would lead to a watering down of any policies due to a lack of interest.

DavidWS

Thanks. In answer : We only wanted a slight increase in the facility. Our earning were well within their guidelines for that amount (and percentage) requested. The property was old but mortgage able. The proof of all this was that the Bristol & West gave us the mortgage and we also had offers from other societies. I did have a problem in my past credit history but that was many years prior to this and it did not cause any problem to those other lenders. We did apply to the Abbey first and by their actions we were FORCED to move lenders. We wanted to stay with the Abbey. This is the reason that I did not think it fair that we should have been penalised.

Rafter

DavidWS,

Does sound a bit unfair on Abbeys part. If you had payment problems on your abbey mortgage in the past then they were totally within their rights to refuse to extend your facility. If it was only a modest amount, you could have ported your existing mortgage and taken out another loan elsewhere for the difference.

To others who feel that Early Redemption Charges (ERCs) and Arrangement fees are unfair .... blame the best buy tables!

To get the interest rates as low as possible, lenders whack up the fees to get themselves to the top of the best buy tables. It is possible to get 'fee free' products, but you will pay a higher interest rate. You pays your money you takes your choice.

R.