Mortgage Release Fee

sheenaread

Good Afternoon All

I am in the fortunate position to be ending my repayment mortgage with Bank of Ireland, formerly Bristol and West Building Society at the end of April 2012. I have two payments left, one for March 2012 and one for April 2012.

Over the past 25 years I have obviously been looking forward to the end date of April 2012. I am now in a state of shock because they want me to pay a Mortgage Release Fee of £87.50 to get out of a mortgage that has come to the natural end of its term. Do I legally have to pay this fee? What happens if I refuse to pay it?

When the mortgage was arranged 25 years ago I paid fees then. Surely those fees were for all admin charges to arrange the mortgage and for its term.

Money is tight for me and lots of other people. A 25 year mortgage is a long, expensive haul for all of us. I haven't budgeted for this unexpected charge and cannot afford to pay it at this time.

Your advice would be of great help to me.

Thrugelmir

Standard charge. Your would have received notification with your original mortgage offer. Also every year with your annual mortgage statement you would have received a statement of current charges and fees.

dunstonh

What happens if I refuse to pay it?

They can refuse to release the charge on your property and place the default on your credit file preventing you from getting credit for some time.

When the mortgage was arranged 25 years ago I paid fees then. Surely those fees were for all admin charges to arrange the mortgage and for its term.

Do you still have the same mortgage you bought 25 years ago or have you periodically bought new deals in the mean time? (i.e. fixed rates, discounted rates etc)

I haven't budgeted for this unexpected charge and cannot afford to pay it at this time.

These charges are published and placed on your contract. If you dont read them when they are presented (and typically every annual statement gives you a guide) then it is not their fault.

sheenaread

Thank you for your comments. Yes I am guilty of not reading the new terms and conditions issued periodically by the mortgage lender. I will attempt to read them now if I still have a copy. If not I will request copies of the changes made throughout the years.

In answer to your question about have I change the mortgage in any way?

The answer is no. This mortgage was set up 25 years ago as a repayment mortgage. i have not changed any part of it. I have made every single payment on time and never defaulted at all. I have accepted every interest increase and decrease and paid the amount levied by the building society to incorporate these charges.

kingstreet

As you have made no changes during the currency of the mortgage, you are only liable to pay any fee which was described to you at the outset.

The lender cannot increase this fee. The only way it could change is if you altered your mortgage at some point to a fix, or other special offer and the final fee was different from that point onward.

Northern Rock tried to increase deeds release or final admin fees a few years ago and the FSA put them, and other lenders, under pressure to charge only what the borrower had agreed to when they selected their rate product.

sheenaread

I shall have a look at the original documents. Does this mean that if I have received changes to the terms and conditions over the years these don't apply only the ones set out 25 years ago?

ACG

No, lenders can change their t&c's to some extent - eg, if the law changes then they may need to make ammendments. They cant re-write them but they can make minor changes.

Its your choice to stick with them or not.

I dont see why your going to sit and read through their paperwork for the sake of £85. Its a valid charge, so to sit there for god knows how many hours getting confused by it all seems pointless.
Just my opinion.

If you are going to struggle to pay it, can yo borrow it from your bank or friend/family. Just pay it back the following month as if you had 1 extra payment to make on your mortgage.

vellum

santander charges even more, £250 for exit fee, it was stated in the contract, no way out unfortunately.

sheenaread

What I want to know is if they stated 25 years ago that the exit fee was for arguments sake say £25. Why should I pay £85 now?

£85 may not seem a lot to some of you but it is to me unfortunately.

vellum

may be when you first took out a mortgage, it was for a fixed period. when the period was over, new terms and conditions would apply for the new period. hence the increase in fee. more like a money making exercise, how could closing down a mortgage account cost that much? 85 is a lot, 250 is robbery. how many staff and paperwork do it take to make up that sum? i think there was an earlier thread somewhere, lets see if i can find it.

http://www.moneysavingexpert.com/reclaim/mortgage-fees

see the unfair practice of mortgage exit fee. lousy lender like santander got around customer complaint by changed the name of the charge and increased the fee substantially.

sheenaread

Thanks vellum.

This is why I need to read the terms and conditions I was given 25 years ago and see if the get out fee was for a fixed period or for the term of the mortgage. Back in those days the terms and conditions were not that long, only two A4 pages of fine print!

Can I just confirm that if a figure was set 25 years ago for the term of the mortgage then any subsequent changes do not apply?

As for Santander that is daylight robbery. I used to bank with them and when I left them they wanted me to pay £5 for not having any money in the account for the brief period of time between transfering to my new bank and closing the acoount. I told then to literarily "get stuffed" and they did!