Mortgage Lender charges on lump sum payments and final exit

bunter07

We have just made 2 lump sum repayments of 20k and 23k respectively to the C&G on a 100k Interest only mortgage only to find that we have been charged 300 pounds. We were asked a few months back by the C&G how we intended to repay the mortgage and wrote back to advise we would pay it back over 3 payments over the coming months. The next payment in November being the final payment. We have since argued with the C&G on the excessive interim charges and they are defiant. If we had known we might have responded to their initial letter to say we would have paid the total 100K in one go and requested the single charges on exit and return of the deeds.

_Andy_

OK, and do you have a query?

dunstonh

We have just made 2 lump sum repayments of 20k and 23k respectively to the C&G on a 100k Interest only mortgage only to find that we have been charged 300 pounds.

This suggests an ERC exists. C&G allow 10% of the balance to be repaid within a tie in period without an ERC being charged. However, if you exceed 10%, then an ERC will be charged. If you are not in a tie in period, then no ERC would be charged.

We have since argued with the C&G on the excessive interim charges and they are defiant.

If you think they are excessive, then why did you buy the mortgage in the first place? its a bit late to be complaining about charges that were disclosed in their charges guide/offer letter when you took the mortgage out.

If we had known we might have responded to their initial letter to say we would have paid the total 100K in one go and requested the single charges on exit and return of the deeds.

Did you ask them first if there would be any charges?
Are you within a tie in period (i.e. part of a current deal, such as fixed rate, discount etc)?

bunter07

Thanks for the response and perhaps we have been possibly a bit naïve. When we received the C&G letter asking us about how we would repay the loan we had never thought of penalties or what the contract may deem regarding any possible fees to process. We thought we were in a position to pay off following recent and soon to come return on pension based savings. Thinking perhaps the prompt from C&G was a good time to oblige never considering there would be separate charges of 150 pounds on each lump sum repayment. On the other hand - to be fair and reasonable some particular guidelines on cost effective draw down of the mortgage on the initial C&G letter would I believe have been more transparent to help us make an informed conclusion. The mortgage is an interest only one of around 8 years duration. We did go and see the C&G in person in August and although the staff were pleasant they did not mention any particular charges when we disclosed our short term stage lump sum repayment plan on how we would settle. They did appear more confused on the pending takeover of C&G and if we could settle by cheque payments at the branch. Not sure now if we have any way of the charges or some of the charges being refunded? We are currently asking what the final settlement will be including charges - how to proceed on both accounts?

dunstonh

Thinking perhaps the prompt from C&G was a good time to oblige never considering there would be separate charges of 150 pounds on each lump sum repayment.

There isnt a £150 charge for making overpayments. The only time you will be charged by C&G for making an overpayment (either regular of single) is if you are within a tie in period due to special deal.

On the other hand - to be fair and reasonable some particular guidelines on cost effective draw down of the mortgage on the initial C&G letter would I believe have been more transparent to help us make an informed conclusion.

The initial letter is a standard letter sent to all interest only mortgages where no repayment vehicle is known to exist. It doesnt cover you deciding to make ad hoc payments not as that is not the intention.

Not sure now if we have any way of the charges or some of the charges being refunded?

As there is no charge for ad hoc payments unless the total amount exceeds 10% of the mortgage balance of January if you are on a special deal (or no charges at all if you are not on a special deal) then this does suggest you are on a special deal.

What deal are you on?

bunter07

The 100k interest only mortgage was 100k as of January (as it has been for some 8 years or more) this year and until August. We then paid a lump sum of 20k (20%) at the C&G High street branch we have been dealing with and staff we are familiar with for a number of years. The branch staff did not offer any prompt reminder of any repayment charges exceeding as you mention - 10%.We did discuss our repayment plan proposals as mentioned in my earlier post and by way of our response to the C&G letter. Again nothing offered back by the C&G on any prompt that we could be better to make one single payment. We then repaid a further 23K (23%) a few weeks back again at the same branch. My partner advised me this morning that a total of 300 pounds has been charged for making these payments. Sorry but I don't have access to the contract as I am away from home at present. My partner is very upset over the charges. If it is revealed that if we paid back the 100k on one payment and the exit charges were fair and reasonable - as contracted - then I will be concerned that we have paid over the odds quite innocently.

dunstonh

If you were on special terms, then you could repay £10,000 without any charge. Any amount of above that would incur charge.

The January statement would tell you if you were tied into a deal and if there were early repayment charges (assuming you didnt move on to a new deal after January this year).

magpiecottage

A flat £300 fee seems odd. Normally it would be a percentage of the amount repaid.

bunter07

The deductions were 150 pounds each payment. My partner is trying to find out more as the interest only mortgage is on a variable rate.

dunstonh

I have a C&G mortgage and have made a number of overpayments in recent years. Never charged. However, I kept myself under the 10% of balance as published on their website. Since coming off my mortgage deal tie in period, I havent made any ad hoc overpayments (just regular) and no charges. I am currently overpaying by more than 10% of January balance (and no charge).