Can Abby legally charge me £700 to borrow more?

jonny5_3

Hi guys,

Ive just sold my flat for £185,000 and bought a house for £245,000.

I need to borrow £72,000 extra on the mortgage to buy the new house, I have been in my interest only mortgage for 18 Months with 2 years due in August where I will look around again for a better deal. I currently am paying 5.29%.

Abby will lend me the extra £72,000 I need however it is at 5.64% and want £700 fee for doing it...

With all these unfair charges coming to light recently, is this still legal, is there anyway I can protest against this charge?

KTF

Sounds like they are putting you on a new product so the cost is the product fee.

silvercar

new application, new mortgage amount, secured on different property = application fee.

AndrewSmith

You can protest if you want, their response would be 'ok, don't have the product then'.

ManAtHome

People have been successfully reclaiming increased exit fees, but with an arrangement fee you have the chance to walk away, so not illegal/unlawful. Depends on whether the £700 is just arrangement or a combination of exit from the old deal and arrangement of the new.

MortgageMamma

If you are due to remortgage in august on a new rate you may well want to consider taking the additional borrowing on standard variable rate - doing it this way there should be no arrangement fee and no tie in's but you would be open to rate increases until august - at which point you would remortgage the whole mortgage amount in one big loan? Get it?

Doing it the other way round means two loans, for two amounts with different finish dates for the fixed rates - which is not good. Get it right first off and you will be better for it.

jonny5_3

Thanks for your prompt responses guys & girls, always great to have such helpful people here :-)

MortgageMamma, I am currently on a Variable rate since I started the mortgage, does this make a difference to your idea proposal?

apk1

As you are moving house does the £700 also include a valuation fee ?

jonny5_3

apk1 wrote: »

As you are moving house does the £700 also include a valuation fee ?

Not as far as I am aware, what would a usual amount charged for a valuation fee?

MarkyMarkD

About £300.

If you are tied in on your existing 2 year product (and it sounds like you are) then you have no choice but to accept whatever Abbey will offer you, as it is never going to be economic to pay the redemption penalty on the original mortgage.

There's no legal restriction on what a lender can ask in up-front fees. It's your choice whether to accept them or not.

This highlights a problem with the concept of product portability, which is that unless you are borrowing exactly the same amount for your new property, you are going to have to borrow an extra amount on whatever product they will let you have. So, my moral would be never to rely on portability and not to tie yourself into a two year product when you think you might move in 18 months' time!

Obviously, if the move was entirely unexpected, you couldn't have done anything different, but if you DID expect that you might feel like moving within the 2 year period, you should have chosen something without any penalties in the first place. It wouldn't have cost much more, and you'd now not have the dilemma that's facing you.

Sorry that it's easy to be wise after the event.

Mr_helpful

Johnny
Valuation fee should be £330 i think. The product you are on is a discount and the product they have offered is another discount with out redemption penalty so come august you can remortgage the lot like mortgage mamma says. The only thing is that the new product carries a 699 booking fee. As august is not far away it may be economic to take their 7.34% svr for the top up as there are no booking fees or redemption penalties. By th time you move you may only have 3 or 4 months before you can remortgage. Also if you add the booking fee you will be paying for it for a long time past august.