Mortgage exit charges

gav1

I am coming to the end of a 2 year discounted mortgage with Alliance and Leicester. Being a bit of a tart, I am looking to move on to another company with a better rate. When I contacted A and L and said I would like to settle up the balance they said fine, and on top of what you owe us, for the privilege of not having a mortgage with us any longer, that'll be £295 please.

I understand that I may have to pay to have a financial product (I paid £195 initially, two years ago), but to pay a fee that extortionate to NO LONGER have such a product, seems a massive rip off. I appreciate I may have to pay a small fee for them to get the deeds out of their safe and mail them to be (a tenner should have covered it) but this strikes me as profiteering of the worst kind - particularly because I wasn't informed of it when I took out the mortgage.

Does anyone have any experience of a similar situation and can advise me?
Thanks

Joe_Bloggs

You are not alone. A post on the A&L fee topic exists here:-
http://forums.moneysavingexpert.com/showthread.html?t=49329
J_B.

glosman555

The BBC's Radio 4 program Moneybox did an item on this subject last saturday 30 March you can listen to a recording if you go to the BBC's website.

MarkyMarkD

gav1 wrote:

I am coming to the end of a 2 year discounted mortgage with Alliance and Leicester. Being a bit of a tart, I am looking to move on to another company with a better rate. When I contacted A and L and said I would like to settle up the balance they said fine, and on top of what you owe us, for the privilege of not having a mortgage with us any longer, that'll be £295 please.

I understand that I may have to pay to have a financial product (I paid 3195 initially, two years ago), but to pay a fee that extortionate to NO LONGER have such a product, seems a massive rip off. I appreciate I may have to pay a small fee for them to get the deeds out of their safe and mail them to be (a tenner should have covered it) but this strikes me as profiteering of the worst kind - particularly because I wasn't informed of it when I took out the mortgage.

Does anyone have any experience of a similar situation and can advise me?
Thanks

[SARCASM]£3195??? I don't think so.

Nearly all lenders charge this sort of fee (even the sainted Nationwide are introducing it). It was part of the deal when you signed up, even if you didn't read about it, and even though the amount then was not £295.

You've had a 2 year product and paid a bargain rate, compared to most people. Do you want your pound of flesh too?[/SARCASM]

To be serious, £295 isn't THAT much over the going rate, and the rate you have paid on that loan will have saved you far more than the difference. So I don't think you've got much to complain about, honestly.

Incidentally, if you switch products with A&L instead of remortgaging, you won't have to pay the £295. And A&L's products are still best buy - I'm in the process of remortgaging to them right now.

c_smith

Send an email to the Financial Ombudsman Service complaining about the charge, quoting how much it was when you first took out your mortgage with the Alliance & Leicester. Also point out to them how this charge is tantamount to extortion and can be varied at any time by lenders to make it financially prohibitive for you to switch your mortgage, thereby impeding competition. Complain about how this charge does not seem to be regulated in any way and does not reflect the small amount of work involved in closing a mortgage account.

I did just that and they forwarded my complaint to the Alliance & Leicester, who promptly reduced the charge to £150 "as a gesture of goodwill".

Queenie

:wave: Welcome c-smith - well done on getting your charge dropped, excellent!

ReportInvestor

MarkyMarkD wrote:

[SARCASM].You've had a 2 year product and paid a bargain rate, compared to most people. Do you want your pound of flesh too?[/SARCASM]

This sounds similar to A&L's approach to children who have benefited from their humungously beneficial top rate kids account - only to be told they are about to get a 1.6% rate cut.

A&L rat on the the kids

Welcome to the real world, A&L style :rolleyes:.

At least with the kid's account you get a choice of leaving immediately with no loss if you are quick on your feet.

MarkyMarkD

I was being sarcastic!

I am personally getting charged £225 (IIRC) by Yorkshire Building Society (lovely cuddly mutuals (NOT)) to redeem my mortgage with them - this charge was £150 only a few months earlier.

But honestly I can't (and won't) complain - I've had a very good mortgage product for 5 years. I don't really see any sum in the range of £200-£300 as "extortion" or "holding customers to ransom" - they are trivial amounts in the context of most mortgage accounts IMHO.

c_smith

MarkyMarkD wrote:

I was being sarcastic!

I am personally getting charged £225 (IIRC) by Yorkshire Building Society (lovely cuddly mutuals (NOT)) to redeem my mortgage with them - this charge was £150 only a few months earlier.

But honestly I can't (and won't) complain - I've had a very good mortgage product for 5 years. I don't really see any sum in the range of £200-£300 as "extortion" or "holding customers to ransom" - they are trivial amounts in the context of most mortgage accounts IMHO.

Don't agree with that MarkyMark. People look at all the aspects of a mortgage product before committing themselves to a contract, including how much it will cost to redeem the mortgage in the future.

If a lender tells you it will cost £100 to redeem it then decides to wallop the price up to £295, where is the justification in that? Unless the amount of work in closing a mortgage account suddenly trebles, there is no justification other than greed. And if people are prepared to sit back and let them away with it then the prices will continue to rise.

MarkyMarkD

The price you are talking about hasn't gone up from £100 to £295 but £195 to £295. Nationwide have put theirs up from NOTHING to £75 IIRC*. Yorkshire BS have put theirs up by £75. Other lenders have put it up by a similar £75 or £100 in the past two years.

* And Nationwide didn't even mention the possibility of such a charge to their customers, so I'm not sure quite how that's better than the situation for lenders who have just put it up from a previously declared amount.

Honestly, £75 or £100 is not a big deal and I'm not sure I understand all the indignation over this!

lisyloo

Honestly, £75 or £100 is not a big deal and I'm not sure I understand all the indignation over this!

I don't think I am indignant but I don't want to pay and extra £100 that I shouldn't have to pay.

It says in my lenders Ts and Cs that they reserve the right to cover reasonable costs.
I can't see how getting the deeds out of the safe (or off a disk) and marking the account as closed, justifies £295 in what is a low paid occupation (admin).

Wage inflation is about 3%-4% at the moment so a 50% cannot be justified.

In the scheme of my mortgage it's a tiny amount, but that doesn't mean I'm happy to hand over £100 for nothing.

If you are happy to hand out an unjustified £100 then I think you've come to the wrong place ;-)