Mortgage Exit Fees

nicnak100777

Having recently renewed my mortgage with northern rock in october and explaining that i was planning to sell my house in january they managed to get me to sign up to a 5 year fixed rate mortgage what they told me was fully portable and that i could add onto it. i gave them the ammount that i would roughly be looking for and was told this was fine, even after being very hesitant about signing up for 5 years they made me feel at ease and that this was the right thing to do.So in jan i put my house on the market and went back to northern rock only to be told that they could not let me borrow any more money and i've now found out it's costing me nearly 6 grand to get out of. Surely this cannot be right any HELP and advice would be greatly appreciated.Thanks Nichola x

LisaT186

When you port your mortgage you are always subject to their underwriting criteria at the time. Firstly you need to ask if any criteria has changed.

Secondly, when you changed your product with Northern Rock did they credit search / score you and take any proof of income? If not, has anything changed in respect of earnings or credit file since you first took the mortgage out with them (not october when you changed it)?

If you can see nothing that has changed, then it may be worth asking if they tape their calls and requesting a copy of the conversation to proove that you were advised to take this option and that you were told that it would be OK. That way you can fight for your redemption penalties if you need to go to another lender.

MarkyMarkD

I think that this is a serious problem for people.

Virtually no lender will re-underwrite your loan when you switch products. This is because they don't need to - they aren't increasing their risk as your loan is on their books whether you switch product or not.

I doubt that they would have bothered to re-underwrite your loan even when you specified that you intended to borrow more money a couple of months down the line. They probably just did a simply affordability analysis, found that you could notionally afford the new loan, and said everything would be OK.

This is definitely mis-selling if they did not make it clear that there was a risk that you could not borrow the extra money if your circumstances (credit history) had changed since your original advance.

If, however, your credit history HAS changed since your original advance, and you didn't tell them about this, then it is arguable as to whether it's their fault for not asking or your fault for not telling.

Portability is a privilege not a right. Lenders are probably not clear about this up front - you can only port your mortgage if they are happy with the security you are offering (i.e. the new house) and your income and credit history at the point of porting.

Lenders do not exempt you from Early Repayment Charges if you are unable to port because of either of these reasons.

And as I've posted previously, it doesn't make sense for them to do so either, as otherwise everyone who wanted to get out of an ERC would deliberately apply to port to a house costing £2m, get declined, and then ask for their ERC to be waived.

I personally think you were very poorly advised to take a 5 year tied-in product three months before moving house. But also you were very foolish to have accepted this offer - how much would you really have lost by paying SVR for three months, following which you could have chosen your new mortgage from the entire market rather than having to accept one from Northern Rock?

nicnak100777

thanks for your advice there was a change in circumstances it was changing from a single to a joint and my partner did have minor credit problems a few years back which we did tell her but all we were told was that it might be a slightly higher interest rate, i know i was very foolish in accepting the 5 year deal but it was made out to sound like this was the thing to do and as i did not have much knowledge of the mortgage market foolishly took her advice.

MarkyMarkD

Well, if that change of circumstances was mentioned at the time there is a case of mis-selling.