Redemption help needed!

hofnerite

We currently have a Nationwide mortgage, fixed rate for 5 years which ends on August 31st 2012 (5 months left) and are facing a redemption fee of around £5000 should we stop using Nationwide.

We were told all along by Nationwide that taking our existing mortgage with us to a new property would be fine. We got the mortgage through a mortgage adviser who also said the same. We were told by Nationwide that the redemption fee isn't a problem if we move because we can take the mortgage with us, hassle free. Happy days.

We then rang them a couple of months ago to ask if it's still OK to take it with us, they put us through a re-evaluation and they said we could not take the existing mortgage with us and offered us something like £100k which is not enough. To cut a long story short, we have decided to rent our next property for several reasons and are happy to do that but we obviously have the burden of this redemption fee, currently £4,486+£90.

Ideally we would like the redemption fee waived, mainly because we have no other option and feel we were somewhat misled into beliveing we could take the mortgage with us. It's not like we will be going to another mortgage provider which is the whole point of a redemption fee. I would think it would be at least fair to reduce it as we are so close to the end of the period and the fact they cannot give us a mortgage themselves.

When I rang them, they said that the wording "take your mortgage with you" referred to the rate, not the actual mortgage level! I basically told them that if that's the case, it was mis-sold the mortgage and I'd be taking it further. So far they have refused to budge on this at all.

My OH starts a new job which we need to relocate 300 odd miles for and we are in the process of selling our house. Ideally we'd like to move at the end of July (she's a teacher) but if we need to pay the redemption then we will have to wait until Sept 1st when the deal runs out. (not a good for a teacher to move, especially with one son starting school in Sept.) It seems ridiculous to me that we need to pay £5000 to get out of contract that runs out within 30 days of us needing to move.

Does anyone have any ideas? May it be possible to get out of this redemption, reduce it or is there any other way?
Would really appreciate some help! Nationwide have been crap at helping us which makes a mockery of their tagline!

betmunch

When porting a mortgage you are closing one account and opening another, for a successful port you need to be accepted for a new account and then your previous mortgages terms a put on the new account.

it sounds to me like your not successfully porting due to Nationwide not lending you enough money, why is this?

If you choose to leave them because of this and there is and ERC due then they will have it off you. They will point out that you had the option to not move but you chose to move anyway knowing that there is a redemption fee to pay.

I cant see you getting it back, but believe me I would love it for you to prove me wrong on this!

kingstreet

I've just had a gander at a key facts illustration which Nationwide issued in 2007. In section 10, it states;-

What happens if you move house?

If you move house and the lender is able to offer you a new loan, you can keep this mortgage product and you will not have to pay an early repayment charge if you transfer the balance and the terms of this product to the new loan for the remainder of the Benefit Period.

This product may not be available for any additional borrowing above the balance transferred when completing your new mortgage. This does not guarantee acceptance of any future loan application.

I then pulled a 2007 Nationwide mortgage offer. Also in section 10, on page 6 of 10 it says;-

If you move house and we are able to offer you a new loan, you can keep this mortgage product and you will not have to pay an early repayment charge. This does not guarantee acceptance of any future loan application.

On the matter of the duration of the redemption period, a lender arranges an interest rate swap with a market counterparty which guarantees the product for the rate and term required. The penalty to break this arrangement early cannot be waived because it is payable by the lender to a third party to recompense it for the early termination, whenever that might be.

Unfortunately, I don't see any grounds on which a complaint against Nationwide could be upheld if escalated to FOS. In the first instance, a borrower should check his/her own mortgage application paperwork.

hofnerite

Thanks for the replies so far. I see what you are both saying

Yes we had the option not to move but I am guessing they wouldn't have let us continue with the mortgage anyway if we had asked for another fixed % period because they would have re-evaluated our circumstances. Annoying as we can afford the repayments and have never missed a payment.

Any more opinions on this much appreciated. Currently our estate agent's mortgage adviser is looking into it too. It would be nice to think that Nationwide could offer us a smaller redemption as a goodwil gesture considering we have been paying 5.5% for the last 5 years

opinions4u

I'm afraid your complaint will have no legs.

And lenders aren't renowned for waiving / reducing ERCs. Quite the opposite in fact.

Sorry if it's not what you want to hear.

sockpuppet

It would have been unlikely that you would not have been able to get a new fixed product with them when this one ended. You would just have needed to ask them for 'customer retention products' to stay with them and they would have given you some options.
They would not have re-evaluated your circumstances particularly, and as long as you dont have arrears there is no reason you would not have been able to move on to a new product.

But as you would be leaving them, either to remortgage to a new lender (or in your case) to sell/move then as far as they are concerned the ERC would stand.

They are not flexible in this, as with other lenders. So I think you're only option to save this payment will be to complete at the end of the period