Mortgage Exit Fee on Bridging Loan

cocker100

Evening all,

Just after a bit of advice.

My partner and her sister recently took out a bridging loan to carry our major refurbishment works on a house that they inherited. As the house was in such a poor state, they could only take out a bridging loan because the house was completely unmortgageable and no company would touch it.

They took out the loan last year and it has recently been settled in full. Upon reading the final statement, the company have added total exit fees of over £600 to the settlement balance on the account, aswell as a redemption fee of £1,400.

After reviewing the credit agreement, the redemption fee is clearly stated so we have no problems with that. However, there is no mention what so ever of any exit (or sealing fee as they refer to it) being payable on repayment of the loan. All other fees are clearly stated, but this one is missing.

Obviously, they were not expecting to have to pay this fee to the loan provider and are now wondering whether there are any grounds to have it refunded.

I know that bridging loans come under buy to let criteria and are therefore unregulated, so is this a non starter or do they have any ground to complain?

Any advice would be appreciated.

Cocker:)

ACG

Your within your rights to complain if you think the lender is in the wrong, its just a different process if the lender decides you are wrong.

Thrugelmir

Is there a breakdown of the "exit fees" ? Your post suggests it consists of multiple items.

Was a charge placed on the property by the lender?

cocker100

Thank you for your replies.

Yes, this was a loan secured by 1st charge on the property.

The fees are referred to as "exit fees" on the final statement of account, however on the settlement breakdown letter they are broken up into 3 parts - administration fee, disbursements, and discharge sealing fee.

cocker100

Bumping this back up..........

Yorkie1

You need to look at the original documents and, if you are not satisfied with the lender's claim, then write to them asking them to provide details of where in the original documentation the basis for each of the elements of the fee can be found.

tvfreek

I'm assuming £1450 is one months interest and £600 covers the 3 fees you mentioned?

In which case this all seems Ok to me.

cocker100

In response to the previous two replies:

There is no mention of the exit fees on the original credit agreement, only the £1,400 redemption fee.

The £1,400 fee is not made up of monthly interest. It is 3.5% of the original loan value of £40,000.

The monthly interest was £700 which was paid on time each month during the duration of the loan.

Thrugelmir

however on the settlement breakdown letter they are broken up into 3 parts - administration fee, disbursements, and discharge sealing fee.

Have you asked for clarification of these. What are the amounts involved?

Sounds like a recharge of legal fees.

cocker100

When we queried what the fees were for, they replied with something along the lines of them being standard fees for closing a mortgage account. (Or words to that effect)

I'll dig out the email in the morning and post back their actual words then.

cocker100

When we queried what the £626 fee was for, we got the following response from the lender:

"The sum of £626 covers the standard charges of dealing with the redemption/sealing of the documentation, in respect of discharging the loan facility and related security."

However, there is definitely no mention of this fee in the original agreement. The only redemption fee repayable on settlement of the loan as quoted on the document is the £1,400, which as said earlier is calculated as 3.5% of original loan of £40,000.

So in total they have paid £1,400 + £626 = £2,026 in redemption fees.