Unfair admin cost?

B3thany79

I have recently re-mortgaged with Leeds building society and one of the terms is we must have bulidings and contents insurance, which is fine. We have been told that we can use any insurance company we wish, however if we don't use Leeds, we will incur a £30 admin fee.

On requesting quotes from other companies, one of them said they believe this practice of charging is now illegal?

Does anyone know if this is the case or do I just pay the fee as most of the other quotes I have are alot cheaper?

ACG

If its unfair why did you agree to the mortgage?

Its only a 1 off fee, its not annual.

My lender (Principality) charged it, but then following an AGM they refunded it back. Its not illegal quite a few lenders charge it - typically building societies.

B3thany79

Thanks for the advice, I assumed it was fine but when another lender queries the legality of it, I had concerns.

Although we didn't actually know about this fee until after the funds had been transferred and we had moved into our new house.

kingstreet

It isn't illegal.

Every time I do a shared ownership application, my clients have to put up with this, even though they have no choice of insurer because the property is insured by the freeholder Housing Association.

Their choice, is of course, to find another lender.

ACG

Treat it as a £30 lesson to read the paperwork in future. Its usually in the KFI along with all fees. The KFI is only 4 pages its designed to give you an overview of the mortgage is as friendly layout as possible.

One of those things.

I have heard some insurance companies may pay it if you ask but im not sure how true that is as i have never seen it happen - but i have never asked.

dunstonh

On requesting quotes from other companies, one of them said they believe this practice of charging is now illegal?

It is not illegal. The quality of staff at these companies can be really dire nowadays. I guess that is what happens when you start a race to the bottom.

A few lenders still charge it. However, it is in decline compared to the number that used to charge. It is not illegal, unlawful or against any rules.

Dave_Ham

Also be mindful some of the Leeds deals are lower rated if you have their (typically more expensive) Home Insurance.

Yorkie1

It is no longer allowed to make it a condition of the mortgage that you take out the insurance from the lender.

However the lender is allowed to charge you an admin fee for checking that your insurance from another firm is sufficient cover.

ValHaller

Yorkie1 wrote: »

It is no longer allowed to make it a condition of the mortgage that you take out the insurance from the lender.

However the lender is allowed to charge you an admin fee for checking that your insurance from another firm is sufficient cover.

Thanks - that clarifies WHY the confusion has arisen.

Dave_Ham

Just checked the direct Leeds products and you certainly are correct, as none are now offering this incentive (if that is what you call it)

Must be relatively recently they withdrew this, as certainly 4-5 months ago they were on offer.

hillcats

I'd write to them asking them to justify the charge as to how they actually incurred these charges, and ask for a refund...