ERCs- Early Repayment Charges - early exit fees. (merged).

MarkyMarkD

fetherston wrote: »

I have got a really annoying problem (i know I should put some cream on it!) - We remortgaged from Halifax becasue we unhappy with their service for various reasons. They sent us a redemption statement. We went ahead with the remortgage but on the afternoon before the completion theyr ang and told us that they had forgotten to add in an early repayment fee (of £5.5k). We were too far down the line to back out. We later foound out that they had forgotten to tell us becasue in fact if we had waited three days there would have been no fee to pay. They didnt tell us that either. We complained, and thence to FSO who found that becasue they originally issued documents (years ago) stating these fees the bank were legally right and therefor the complaint could not proceed. He did conceed that events were 'regretable' and that Halifax should possibly have been more sensible when we firtst made the complaint. Where should I go now? All advice welcomed.

If you've taken it via Halifax's complaints process and thence to FOS, and been rejected at every stage, I honestly think you have done everything you can.

I'd point out, though, that:

(1) your solicitor was incompetent, for not reading the terms of your original mortgage when setting the redemption date; and
(2) you were numpties yourselves. I presume that you were 3 days short of the end of a fixed-rate or discounted term? You signed up to the mortgage in the first place and should have been well aware of the ERC. And your solicitor should have discussed it with you when you took that mortgage out in the first place - unless it was merely a product switch with Halifax in which case again it's down to you.

It's very poor that Halifax made the mistake, and I'm incredibly surprised that they are enforcing the ERC in the circumstances.

EXPAT_2

Is there no way you could pay off all but £1 of the mortgage, & later pay the £1 on the day you would be clear of incurring an ERC ?

dunstonh

EXPAT wrote: »

Is there no way you could pay off all but £1 of the mortgage, & later pay the £1 on the day you would be clear of incurring an ERC ?

That would not avoid an ERC.

MarkyMarkD

... and you couldn't do it, unless you weren't selling the house OR remortgaging elsewhere, because the second lender wouldn't accept not having a first charge on the property.

Apart from all the above, there ARE lenders who will allow overpayments - even unlimited ones - without penalty, as long as you don't redeem. My mortgage, for example, has this feature. But I can't remortgage elsewhere without penalty unless I wait till the expiry of the ERC.

charlieandlola2007

Warning! I recently got a redemption statement from Northern Rock. The Early Repayment Fee was £4090. The last time I got a redemption statement, the fee was £3750. I telephoned them today and they said that an ERF had been erroneously applied to an additional loan which was taken out a couple of years ago. They quickly agreed to remove the extra £340 fee but it might be something worth watching out for.

allieballie1

Hi everyone,

This is my first post. My question is about early repayment charges. Basically, I moved 1 year ago and almost doubled my mortgage. Anyway, my bank allowed me to keep the fixed rate I was on and then take another loan at another fixed rate on top of it.

What I want to know is that if I had to downsize, would I be allowed to come out of one of these and only pay one ERC? Or would I have to pay both ERCs and then start from scratch with a brand new mortgage? I have been advised that they are portable and I was allowed to port the original one from my old house to the new one.

Any help and advice on this would be very much appreciated.

Thanks,

Allie

MarkyMarkD

Hi allieballie and welcome to MSE.

Subject to your lender being willing to lend you the amount you require on your new property, they should allow you to port your product(s). You should obviously port the one with the best rate and the longest outstanding fix, if the ERCs are at the same percentage. Indeed, you may port 100% of one and 50% of the other, or whatever you need. There's no need to take all of both.

TDH_4

hi I had 2 months left on my tie in which was a 5 year tie in, and because i had lost my job (so had some arrears) I had to sell my house to clear all my debts in full which I did, as I wanted a new mortgage (some where to live) I thought just transfer over to a smaller mortgage (so no charges). My mortgage company would not give me a new mortgage (due to the previous arrears, all paid up). (I was back in employment). But still charged me early redemption, how can that be?

dunstonh

My mortgage company would not give me a new mortgage (due to the previous arrears, all paid up). (I was back in employment). But still charged me early redemption, how can that be?

You applied for a mortgage on a certain property and they agreed that. You wanted a special deal with a tie in and they gave you that.

However, when you wanted to change to a new property, they were not interested but you still decided to do it. Therefore they are entitled to charge as it was your decision, not theirs.

TDH_4

Appreciate your statement, but if I had not down sized I may have lost my house. It was done to pay off the arrears and give the mortgage company their money back, I also was more than happy to continue with that company on another product. If I could have held out for a few more months then it would have been waived, but I couldn,t circumstance would not allow. There should be some system in place that reduces the amount of payback over time (like the assurance policy you take out to pay off the mortgage). The current way around they have the cake and they indeed eat it.
You should be lobbying for this in your role as financial advisors.