Early redemption penalty higher than on offer letter.

StephNotts

Hi there

We've just redeemed a buy to let mortgage (we were accidental landlords, long story) and the redemption penalty is higher than on the mortgage offer letter and higher than they advised 6 months ago. There is only 6 months remaining of the mortgage so we were led to believe the final penalty would 2% x .5 The sum they've taken is higher even than 100% of the final year's penalty for 12 months and doesn't include interest. It's just random. I've told them they've made a mistake and they're adamant they haven't. I've asked them to send a full breakdown which they say they don't have to do. Surely I have a legal right to know who they're working this out? It all feels very fishy indeed, particularly as they won't send their workings. What are my rights?

Many thanks in advance
Steph

dunstonh

What did they say when you to raised the fact you believe the ERC is different to what the mortgage offer letter says?

You wouldn't expect them to just say "no its not" but to explain why its not. Especially if you have given them the working to what you think it should be. They should highlight where it is wrong. I suspect they have misinterpreted your request as the response is more typical of people trying to get out of the ERC by asking them to justify it.

If you post your figures here and what they have charged, we can take a look to see if we can make sense of it.

ACG

What does your Mortgage offer say they will charge in the last 12 months of a deal? You might find it is around £100 higher than that as they may also be charging some sort of deeds release fee.

kingstreet

Typically, the redemption figure will include;-

outstanding balance
accrued interest
early redemption charge
discharge fee.

We would need to be able to compare each figure to your expectation. Anything else is pure speculation.

StephNotts

On the offer letter the figure for early redemption charge between June 2017 and June 2018 is set at £3,300 but six months into that period, when it should reduce, they're charging £3,500. There is a separate box for interest and discharge fee all of which are as on the offer letter. This is higher than the figure they quoted me to end the mortgage in October of last year. Presumably they're obliged to show their workings - although they were literally "we say this is right, so it is". They have the money, because they quoted me a figure which seemed right I advised the solicitor to pay them direct. Now I need to get some of it back!!

kingstreet

Make a complaint and request a refund of the difference between what you believe you should have paid and what you actually paid.

StephNotts

I will but without the figures they're using it's pretty hard to calculate. They claim the figure quoted as highest payable is an estimate! Are they obliged to provide me with this information? I presume they are but nothing would surprise me!

TrickyDicky101

What does your mortgage agreement state with regards to ERC payable on early redemption? It should provide something along the lines of "1% of outstanding balance".

If you get that and then provide the relevant figures either you or we can calculate it for you.

Tom99

If the final year redemption charge is set at £3,300 then that's what it will be if you redeem 11 mths or 1 mth from the expiry date.

davidmcn

StephNotts wrote: »

There is only 6 months remaining of the mortgage so we were led to believe the final penalty would 2% x .5

"Led to believe" by whom or what?

ViolaLass

Is the ERC a percentage of the amount still remaining? If so, did the amount you owe increase in the last six months?