Mortgage Discharge Fees

Trebor16

My wife and I are in the position of being able to pay off our mortgage in the next two to three months. We have received a statement which shows we would have to pay a "final repayment charge" of £275. My understanding is that this fee is the same as the old mortgage discharge fees.

Back in 2006 when I sold my last property, Northern Rock tried to levy one of these fees, which I felt was excessive. I asked them to provide a breakdown of the fee so they could justify their costs they were trying to charge me. They declined to provide me with the breakdown and in the end they refunded their £250 charge in full.

The same happened in 2007 when I remortgaged my property and C & G wanted a fee of £225. I again asked for a full breakdown of their costs and they actually refunded the entire fee!

Is the position still the same with being able to challenge these final repayment fees? I am more than happy to pay an amount which is a fair reflection of their actual costs to discharge the mortgage but I think a charge of £275 is extracting the urine! I know The Woolwich only used to charge £50 for this fee back in 1997 and in January 2002 it was £95, so an increase to £275 is ridiculous.

I understand their costs would be in the region of £50 for the discharge of the mortgage.

harvey115

I am also in the process of getting a Mortgage and the Security Release Fee quoted on my KFI is £195. Its with Clydesdale.

dunstonh

Back in 2006 when I sold my last property, Northern Rock tried to levy one of these fees, which I felt was excessive. I asked them to provide a breakdown of the fee so they could justify their costs they were trying to charge me. They declined to provide me with the breakdown and in the end they refunded their £250 charge in full.

That was lucky. They have no requirement to justify them and the FSA ruling on them is that they should only charge what was on your agreement when you applied for the mortgage (or the last deal purchased).

Is the position still the same with being able to challenge these final repayment fees?

There is no such position. You have just got lucky. Possibly as the amounts are small and sometimes it is cheaper to pay to get rid of a trouble maker rather than argue.

I understand their costs would be in the region of £50 for the discharge of the mortgage.

Some lenders moved their fees from front end to back end. its not all about the work involved at that point.

kingstreet

The FSA took action against lenders increasing deeds release and discharge fees during the currency of the mortgage.

It is my understanding that if the fee quoted at discharge is the same as the fee quoted at inception on your key facts illustration and mortgage offer, then you are liable to pay that fee.

Others will no doubt be along to clarify and to agree or disagree with my opinion.

Trebor16

Thanks for the input. I guess I have nothing to lose by asking them, as I did before.:)

dunstonh

You are correct Kingstreet.

The FSA was concerned at the way they were increasing. The amount was not an issue as mentioned above, it was part of an overall package. The FSA ruled that they only had to refund the difference between what was agreed by the client at the start of the deal and what they paid at the end.

Given the current complaints charge, it is possible to blackmail some lenders into giving a refund.

Trebor16

I decided to take this to the financial services ombudsman and what a slow process it is. It is several months since I sent the forms the ombudsman asked me to complete and I am still waiting to hear from them. However, I have heard from the Woolwich today who have written to me to tell me that my mortgage is now regarded as fully redeemed with no request to pay the fee of £275!


Looks like I have had a result!


I also received a letter from the Woolwich telling me they don't hold physical deeds for my house and all information is held electronically by the Land Registry. So with no physical deeds for the Woolwich to deal with it is one less cost for them when closing down a mortgage account.

dunstonh

I decided to take this to the financial services ombudsman and what a slow process it is. It is several months since I sent the forms the ombudsman asked me to complete and I am still waiting to hear from them. However, I have heard from the Woolwich today who have written to me to tell me that my mortgage is now regarded as fully redeemed with no request to pay the fee of £275!


Looks like I have had a result!

As I said above, the blackmail worked. The FOS give the firms a chance to settle without incurring the FOS fee if they do it before it is allocated to an adjudicator. So, Woolwich had a choice of paying £550 and winning their complaint or paying you £275 and losing the complaint.

Whilst you got the money and are happy about that, it does seem an abuse of the complaints process that needs to be addressed as it is other consumers that pay for this.

Trebor16

dunstonh wrote: »

As I said above, the blackmail worked.

To describe it as blackmail is absurd.

dunstonh wrote:

The FOS give the firms a chance to settle without incurring the FOS fee if they do it before it is allocated to an adjudicator. So, Woolwich had a choice of paying £550 and winning their complaint or paying you £275 and losing the complaint.

Woolwich also had the choice of charging a reasonable mortgage discharge fee but they didn't. Woolwich could have also resolved this much earlier without forcing me down the ombudsman route, but they chose not to.

dunstonh wrote:

Whilst you got the money and are happy about that, it does seem an abuse of the complaints process that needs to be addressed as it is other consumers that pay for this.

How is it an abuse of the process? I challenged a fee which I thought was disproportionate and extortionate. Woolwich could have been more reasonable with the setting of the fee, instead of charging three times as much as other banks for the same service. They could have been more accommodating when I initially complained. They have only themselves to blame for how the situation got so far.

dunstonh

To describe it as blackmail is absurd.

It is a form of blackmail. They are given the choice of paying you £275 or suffer £550 from the FOS for doing nothing wrong. You put them in that position.

Woolwich also had the choice of charging a reasonable mortgage discharge fee but they didn't. Woolwich could have also resolved this much earlier without forcing me down the ombudsman route, but they chose not to.

£275 is not unreasonable. You accepted it when you bought the mortgage. So, if it was unreasonable to you then whey did you buy it in the first place?

They did try and resolve it without forcing you to the ombudsman. They correctly rejected your complaint as you have no basis for complaint. You then decided to pursue it further.

How is it an abuse of the process? I challenged a fee which I thought was disproportionate and extortionate.

The FOS are there to enforce regulation. The FSA did a review and set rules on mortgage redemption charges and Woolwich complied with those rules. The FOS would have looked at the fee when you bought the mortgage and checked you paid the same amount when you redeemed the mortgage. If it was more they would have awarded the difference and possibly a goodwill gesture on top. If you paid the same as the contract then the FOS would have rejected your complaint in line with the regulators guidelines.

It hasnt been a waste of time for you as you got your money. However, it is a cost that will be met by others. The ability to blackmail firms into paying smaller amounts than the FOS fee is an issue that needs to be resolved. Perhaps by increasing the fee on upheld complaints and removing the fee on rejected complaints. It is extremely unfair that firms that have done nothing wrong have to suffer fees for try-it-on complaints like this.

Leon_W

If I were The Woolwich I'd pay the £550 to the FOS and make you pay the £275 just for the principle of it


If you didn't like the £275 redemption fee you shouldn't have bought the mortgage in the first place and gone elsewhere.