Incorrect term of fixed mortgage

malpenn

I have recently found out that my mortgage was set to the incorrect time period of the fixed rate term.

When I purchased my new house my old mortgage was transferred and I expected this to be for the remaining term (47 months), instead the lender reset the term back to 5 years at their current fixed rate, after the fixed rate term had finished the rate would drop down to 2% above BOE, which would have made my repayment cheaper and I would have been able to switch my mortgage ealierw without paying redemption fee's.

I have reviewed the mortgage offer documents and they clearly say that the remaining term is transferred to the new property so therefore I have been over paying for the past 9 months and locked into a mortgage which I should have been free to leave without redemption fee's.

Does anyone have any views on how I can approach my lender about this error.

Many thanks

opinions4u

Does anyone have any views on how I can approach my lender about this error.

Ring them?

Some lenders have a minimum mortgage term of 5 years.

Your post isn't totally clear, so it's hard to guide you on next steps.

Thrugelmir

Whilst the mortgage charge is transferred from one property to another. The loan is not. The old one is discharged and new one taken out. When you moved house you appear to have applied for a 5 year fixed rate product. Hence the 60 month term.

malpenn

My previous mortgage was transferred hence the mortgage offer showing 47 months remaining in various sections of the mortgage offer. The difference between the higher value of the new property and the existing mortgage was made up by taking an additional further advance which was classed as a new mortgage (two mortgage payments are taken from my bank account each month) which was set at the new 60 months period at a slightly higher fixed interest rate.

My solicitor was also slightly confussed by the way that the lender had laid out the borrowings for the new property, my concern is the finanical loss I have with being locked into the orginal mortgage when I should have been free to switch lenders, I understand that I would have need to pay a redemption fee for the second mortgage (further advance) but when I looked at switch mortgages last year I calculated if I paid the redemption fee for the second mortgage when I should have been free from the fees of the transferred mortgage I would have saved over £3,000 on the lower rates another lender had offerred me but because of the two redemption figures I was quoted I would have only saved about £500 so I continued with the existing provider but now I feel that I was financially locked into a mortgage which I shouldn't have been

Wh05apk

I would go back to your broker/advisor and ask them to clarify what has been done, it sounds like instead of porting your previous deal they have given you a new deal, if that was the case, you probably paid a sizeable redemption penalty on the previous deal (which probably got lost in the purchase costs somewhere?)

Thrugelmir

malpenn wrote: »

My previous mortgage was transferred hence the mortgage offer showing 47 months remaining in various sections of the mortgage offer. The difference between the higher value of the new property and the existing mortgage was made up by taking an additional further advance which was classed as a new mortgage (two mortgage payments are taken from my bank account each month) which was set at the new 60 months period at a slightly higher fixed interest rate.

Then you have 2 sub loan accounts that make up your mortgage. The existing mortgage balance would have been ported, i.e. the existing terms and conditions would have remained in place. Any additional borrowing would have been subject to the terms and conditions of the product you opted for.

So your options are to wait until the term of the fixed product has expired or you pay the early repayment charge to exit. The lender has nothing to answer for.

malpenn

So i have the orginal mortgage which should have had 47 month fixed rate (say 5%) then it would drop down to 2.5%, they told me it is fixed to April 2012 (equally 60 months terms) but as per the mortgage offer it should have expired in March 2011, therefore from March 2011 to present date I should have only paid 2.5% but the higher re-payments at 5% were leaving my bank account

Then my further advance was fixed at 60months from the date I moved to the new properity - that is fine, the rate was 5.79% so a lower rate was available on the market during December 2010.

My issue is that in December 2010 I asked my lender for a total cost to pay the redemption fees and move my mortgage to another provider who was offering a rate of 2.01% which would have saved me a couple of thousand if the contracts and redemption figures they quoted me were correct, but they quoted me that both mortgages would expire in April 2012 so therefore I would need to pay redemption fee's for both mortgages for a fixed term which should have been shorter (expired in March 2011) for the primary mortgage.

getmore4less

Your first post does not highlight this is not a recent problem.

It looks like this has taken you a year to spot this issue which goes back to a remortgage even further back?

Why not do a proper time line with dates and rate including any redemtion requests.

Thrugelmir

Give your lender a call and explain that sub account XXXXX appears to have been set up with the wrong product expiry date. Suggest you ask for the refund of overpaid interest to be credited to the other mortgage account.

As at December 2010 you would have had to pay ERC's on both sub accounts. So even if the date quoted was incorrect on one account. Difficult to see a complaint receiving much of a response.

malpenn

Yes you are correct I have not spotted this until now and I didn't expect the lender to change the rate which the mortgage offer reflects to the rate I have been paying.

I wished to understand the views of how I could approach the lender, I expect a full refund but I am not sure if I could claim compensation for the money I would have saved if they had put me on the correct contract / term period and I switched the mortgage last year to another provider at a lower rate, it annoys me that if I didn't notice their error I would continue to pay the higher rate until April 2012 and they have manually altered what the mortgage offer has stated.

malpenn

Thanks Thrugelmir,

So I December 2010 was quoted £1,900 Early redemption fee on the mortgage in question but it should have expired in March 2011 (but as per their contacts expired in April 2012) so the early redemption figure should have been far lower, this is my question can I claim they financially locked me into their mortgage by quoting an higher / incorrect redemption fee for the mortgage in question ?