Mortgage Indemnity Fees - Can we claim back?

oscarsacco

I have often wondered about this also; We paid a MIG on our last place (high LTV), on a 30 year mortgage - we only ended up staying there for 2 years. Now, if I don't claim on my car insurance I wouldn't expect to have the premium refunded. However, if I cancelled the policy after a couple of months I would expect to get at least half of it back...

MarkyMarkD

The biggest risk on these types of policy is at the start, both because people find they can't afford the mortgage and simply walk away (and they have little personal money invested in it at that stage) and because of house price inflation reducing the insurer's exposure.

So if any refund was due, calculated on the basis of the period at risk, it would not be very significant.

Five years is longer than most people have their mortgage for in any case - if premiums were calculated on the basis of time on risk, you would have paid MORE not LESS.

As for Grabbit's comments:

Grabbit wrote:

The mortgagee never received a service for it, were never told what it entailed, and never signed a contract for it - BUT THEY CHARGED YOU IT ANYWAY. And if you didn't have one they wouldn't give you a mortgage.

So if bank and mortgage charges are meant to reflect the true cost of the service provided then what was the true cost of an indemnity that one was charged something like £1000 for

... how many things does s/he want to get wrong in two paragraphs?

Never received a service for it - you received a mortgage which otherwise you wouldn't have got because it wouldn't be worth the lender accepting that level of risk based on the interest you were paying.

Were never told what it entailed - you should have asked. But in any case, you don't need to understand it - it's simply a fee which the lender chooses to charge as they are legitimately allowed to do.

Never signed a contract for it - it was included in your mortgage offer, which you accepted by signing the mortgage offer. Offer & acceptance = contract. D'oh!

"So if bank and mortgage charges are meant to reflect the true cost of the service provided" ... the FSA have emphatically NOT stated this, even in the context of MEAFs. They have actually stated that lenders can charge any amount that they like, without any relationship to costs, as long as they notify the borrower of the amount due up front.

Why are people so daft about fees for financial services? Nobody suggests that you should be able to walk into Sainsbury's and demand to pay cost price for everything. It's no different with financial services. As long as you are told what mortgage fees are due, up front, then they are completely legitimate and there is no case to argue for a refund just because you don't like them, or because they involve an element of profit for the lender. Lenders exist to make money, not as a form of charity.

tigerminxy

stash36 wrote:

Thanks for the sarcastic comments from the advisers.
I don't think it's a fair charge and, nothing ventured, nothing gained.
I'll let you kow how I get on.

I'm not an advisor and I think you're wrong to think you should get a refund on the charge. If there's any unfairness in it, it's more to do with the charge itself, not the fact that you don't get it refunded if you redeem a mortgage.

However, nothing ventured, nothing gained and good luck to you if you manage to get it back.

MarkyMarkD

One thing I forgot to mention. Dwsjarcmcd (complicated name to type, that one) correctly points out that those lenders who do not charge mortgage indemnity insurance (or higher lending charge, to use its new name) generally charge higher interest rates on higher percentage loans.

It's all swings and roundabouts, and neither approach is inherently any fairer IMHO.

millsy1980

stash36 wrote:

Thanks for the sarcastic comments from the advisers.
I don't think it's a fair charge and, nothing ventured, nothing gained.
I'll let you kow how I get on.

Here is another for you, if you didn't want to pay it then put a bigger deposit down. 25% would do the trick, or did you not have this and couldn't wait the time it would take to accumulate it?

regularsaver1

Yeah, as above says - you only get charged a higher lending charge if you don't put a bigger deposit down