Remortgage Exit Fee - Fixed Term Ended - Santander

laud126

My 2 year fixed term mortgage came to an end on 3/1/13. My lovely provider Santander automatically sent me a letter dated 3/1/13 (the day the agreement ended) which I received on 10/1/13 advising me of this fact. Would it not be correct procedure for my mortgage lender to advise me in ADVANCE of the fixed term ending in order to give me time to consider my options? I called them to ask this question and they said it's ok as my first increased payment would not be until 3/2/13. I said that it was not ok as if I decided to move lender, I would be liable for the new increased rate from 3/1/13 - therefore they have put me in a spot where I have no choice to pay the increased rate from 3/1/13 - surely this is bad practice? If I was renewing, say, car insurance, my insurance company would write to me in advance reminding me a renewal would soon be due. In addition, when I stated I would be considering moving to a new lender, they said I would be charged £225 exit fee to cover "administration, legal and forwarding deeds costs". I would expect to pay a fee if I had not completed my fixed term agreement, but as I have completed it and am now on their variable rate, surely I'm not expected to pay an exit charge. I spoke with HSBC to discuss a new mortgage and asked them if they would apply the same practice. The adviser said that they would send a letter some weeks in advance to say a fixed term was coming to and end and that no charge would be applicable if the fixed term was completed. A charge would only be made if I left within a fixed term. Has anyone any experience of this or avoided paying either the exit fee on a completed fixed term or the increased interest charges as notification was not give in advance of change of rate? Thanks.

dunstonh

Would it not be correct procedure for my mortgage lender to advise me in ADVANCE of the fixed term ending in order to give me time to consider my options?

Typically it happens a few days before to notify you of payment change in the following month. As mortgages are typically paid in advance, you now have 4 weeks left on the old deal before you move to the new one.

I called them to ask this question and they said it's ok as my first increased payment would not be until 3/2/13.

That seems ok and what you would expect to happen.

I said that it was not ok as if I decided to move lender, I would be liable for the new increased rate from 3/1/13

That is your choice. Nothing to do with them.

therefore they have put me in a spot where I have no choice to pay the increased rate from 3/1/13 - surely this is bad practice?

No. It is what you agreed when you bought the mortgage. They are following the contract you agreed.

If I was renewing, say, car insurance, my insurance company would write to me in advance reminding me a renewal would soon be due.

Ahh, this seems to be your problem. You think its a renewal. It is not.

In addition, when I stated I would be considering moving to a new lender, they said I would be charged £225 exit fee to cover "administration, legal and forwarding deeds costs".

Again, that is in line with what you would expect.

I would expect to pay a fee if I had not completed my fixed term agreement, but as I have completed it and am now on their variable rate, surely I'm not expected to pay an exit charge.

You pay an ERC (early repayment charge) if you repay the mortgage early and are within the tie in period. They are referring to the MEAF (mortgage exit admistration fee). Most mortgages have these.

I spoke with HSBC to discuss a new mortgage and asked them if they would apply the same practice. The adviser said that they would send a letter some weeks in advance to say a fixed term was coming to and end and that no charge would be applicable if the fixed term was completed.

HSBC moved the exit charge to the front end. So, you pay a higher amount up front. Like the other lenders, they write to you in advance of the next payment. Just as Santander have done. Also, I didnt think HSBC had advisers on mortgages on more.

Has anyone any experience of this or avoided paying either the exit fee on a completed fixed term or the increased interest charges as notification was not give in advance of change of rate?

You appear to be confused with some of the things here and mixing things up. The MEAF is fair if you agreed to it when you bought the mortgage. Check your documentation from Santander when you bought the mortgage and you should see it mentioned on there. You were also notified in good time.

laud126

dunstonh wrote: »

Typically it happens a few days before to notify you of payment change in the following month. As mortgages are typically paid in advance, you now have 4 weeks left on the old deal before you move to the new one.
Ah - so you think I'm probably paying on, say, 1st Feb for the month of February? If so, then I see. If I was to move mortgages in January, then I'm still on the "old" rate?


That seems ok and what you would expect to happen.



That is your choice. Nothing to do with them.



No. It is what you agreed when you bought the mortgage. They are following the contract you agreed.



Ahh, this seems to be your problem. You think its a renewal. It is not.
Agreed, but think it would be good practice to advise me in advance?


Again, that is in line with what you would expect.



You pay an ERC (early repayment charge) if you repay the mortgage early and are within the tie in period. They are referring to the MEAF (mortgage exit admistration fee). Most mortgages have these.


HSBC moved the exit charge to the front end. So, you pay a higher amount up front. Like the other lenders, they write to you in advance of the next payment. Just as Santander have done. Also, I didnt think HSBC had advisers on mortgages on more.

The new mortgage quoted for by HSBC has no initial charges - they're paying for it and they say no exit charges assuming I complete the new fixed term.

You appear to be confused with some of the things here and mixing things up. The MEAF is fair if you agreed to it when you bought the mortgage. Check your documentation from Santander when you bought the mortgage and you should see it mentioned on there. You were also notified in good time.

Checked my paperwork for the original mortgage. It's all under the section of "early repayment" and refers to a £225 fee. There lots of "boxes" with different meanings. As the document is all to do with a "fixed term", the way it is set out, you assume it applies to early redemption of the fixed term. I need to re-read it to decide if the £225 applies to both inside and outside the fixed term. One thing is clear - the paperwork is very unclear!

Thank you for taking the time to respond. Very helpful and nice to get an opinion. I've written a complaint letter - although from what you say, it will probably amount to nothing. Thanks again.

laud126

Seems I haven't quite got the hang of this system yet - I have further responses to your quotes above but it hasn't displayed as clearly as yours! Sorry.

dunstonh

I copy and paste the bits and then select the text I have pasted and press the speech bubble icon which wraps it in a quote.

One thing is clear - the paperwork is very unclear!

One of the few things the FSA have done well as it the introduction of the Key features illustration that more or less standardises the layout of such documents. The charges section lists the charges.

Basically, with mortgages you have three things to consider when comparing deals. 1 - the entry charges. 2 - the exit charges and 3 - the monthly payments in between. Note I say monthly payments as interest rate is less important on small mortgages than it is on large ones.

A large entry fee with low rate is often marketed with larger mortgages in mind (and vice versa with smaller ones). Alliance & Leicester (in case yours is an old A&L one) was marketed with a small entry fee and small exit fee but the exit fee was waived if you bought a new deal with them. That was their model. HSBC cherry pick mortgages and tend to have higher entry fees and little or no exit fee. That can make it more expensive on short term deals. Some of their deals are marketed with the larger borrower in mind.