Changing type of morgage

Dee_Dee_9

Hi

We are with the Coventry Builing Society and had a Repayment mortgage wtih them for 3 years.

We have now changed to an Interest Only Mortgage (still with the Coventry). A signature was all that was required, but they charged us £400??

Can we claim some of this back?

Cheers

MortgageMamma

Doubt it. Lenders incur costs for such things although I've got to admit £400 is a bit steep

homer_j_3

£400 to convert from repayment to interest only seems a little extorionate. Was there any other work involved - if not, I would be asking them to justify the cost in light of the FSA's recent guidance of lenders charging fees that are not relative to the work involved..

Noz

yeah, that sounds very strange - did you change interest rate product at the same time?

brock-cruse

Hi that does seem high. We are with the coventry and twice over the last 5 years have changed part of our interest only to a repayment. Each time they have charged us a £45 admin fee only. I would phone them up and query it straight away (always found their customer service to be excellent...even if i am remortgaging with someone else!!).

MarkyMarkD

homer_j wrote: »

£400 to convert from repayment to interest only seems a little extorionate. Was there any other work involved - if not, I would be asking them to justify the cost in light of the FSA's recent guidance of lenders charging fees that are not relative to the work involved..

Homer, what ARE you talking about?

There has been absolutely no FSA guidance on "charging fees that are not relative to the work involved". The only FSA guidance on fees relates to MEAFs (exit fees) and specifically states that the fees charged do NOT have to bear any resemblance to the costs involved.

They in fact state that they can charge anything they like for MEAFs, as long as they tell you up front.

All lenders charge for change of repayment basis. They are allowed to do so.

homer_j_3

The FSA has spoken to lenders with regards to charging extortionate fees, I know this because my wife has been heavily involved at assessing the risk to the company that she works for and reviewing any fees that may be deemed in this way.

I have never disputed that they cannot charge it only to check under what circumstances they are justifying the cost? There may be a reasonable explanation but this has nothing todo with MEAF's.

Ultimately, I have some knowledge of what is going on between the FSA and the members of the CML so thought my comments were fair. I think YOU are the one who needs to be asked "what ARE you talking about?"

MarkyMarkD

Apologies, Homer - I was confusing you with one of the dozens of people who have read the FSA's MEAF guidelines, interpreted them wrongly, and then extrapolated them to every other sort of fee in the universe.

Could you point me towards the published guidelines you are referring to, please, as I haven't seen them?

There is a huge spectrum between "treating customers fairly" and "charging customers the true cost for each transaction".

Having stopped being bolshy, I do agree that £400 is a very high fee for a straightforward change of repayment basis. Maybe the OP isn't telling us the full story, and they actually switched product at the same time as changing repayment basis?

Dee_Dee_9

homer_j wrote: »

£400 to convert from repayment to interest only seems a little extorionate. Was there any other work involved - if not, I would be asking them to justify the cost in light of the FSA's recent guidance of lenders charging fees that are not relative to the work involved..

:eek: No, no other work involved. My husband has been working for himself and didn't have more than 3 years books to show his income - also we needed to lower the mortgage cos we were skint. We couldn't change lenders so we had no option but to pay the hefty charge. We didn't pay it out of our pocket it went on the existing mortgage amount.

silvercar

Search out their booklet "fees and charges explained". I have their May 2006 edition in front of me which states (page 15):

"transfers from an interest only to a repayment mortgage - and vice versa £50".

Either they have made a mistake or they have recently increased their charge dramatically. If the former they should correct it, if the latter you should be able to claim that this is significantly higher than notified when you took out the mortgage anc claim back the difference.

homer_j_3

MarkyMarkD wrote: »

Apologies, Homer - I was confusing you with one of the dozens of people who have read the FSA's MEAF guidelines, interpreted them wrongly, and then extrapolated them to every other sort of fee in the universe.

Could you point me towards the published guidelines you are referring to, please, as I haven't seen them?

There is a huge spectrum between "treating customers fairly" and "charging customers the true cost for each transaction".

Having stopped being bolshy, I do agree that £400 is a very high fee for a straightforward change of repayment basis. Maybe the OP isn't telling us the full story, and they actually switched product at the same time as changing repayment basis?

No problem - I accept your apology.

My wife tells me that there are no specific guidelines published in the public forum but it is not uncommon for the regulatory body to communicate with the members of the CML and make commentary what they feel will be the "hot topics" within the industry as a heads up to what they may decide to focus on in the future.

The MEAF situation and I guess the Bank Charges (but not 100% certain) situation has been something that the FSA has been fairly involved with. The FSA issued all CML members a request to review their MEAFs and gave them certain options once they had done that.

As the FSA will never be so broad brush about these things, they did not specifically say that other fees would not be subject to the same options in the future. As with anything the FSA does, it is always left down to the people who follow their rules to interpret them and it was interpretted by the company my wife works for that whilst they were reviewing their MEAF's it would be more cost effective to review them all so they don't have to keep repeating the exercise as the "hot topic" goes from MEAF's to "Late Payment Fees" to " Transfer of Equity Fees" etc.

So as I said, if a Lender is found to have complaint where it cannot justify its costs then it wouldn't suprise me if it took favour with the consumer.

MEAFs were roughly £40 when I started in the industry - the process was harder, less technology involved and really did justify the £40. Now, I would say that £40 would profit a lender still comfortably with the few hours work and direct computer link to the HMLR.

With changing from repayment to interest only - most lenders I know and have the opportunity of seeing their computer systems, it is just the case of updating a couple of fields on the computer system and the computer calculates and issues a letter. £400 easily earnt in my eyes. If it takes an hour to do you will be lucky - I bet the person processing them will be sick to the back teeth of their company paying £6/8 an hour and taking £400/£1200 in return