Reclaim Mortgage Arrears Charges. NEW CAMPAIGN.

homer_j_3

Apologies Dunston and Triple, I have completely missed the statement about claiming the gmac erc. DOH!

My arguments have been about claiming arrears charges so I guess we have been coming from 2 different sides at my complete blundered blindness to read. That will teach me to post whilst trying to get through to the right department on the phone!

dunstonh

I thought it was strange but it does explain it.

Tripledrop

lol, makes sense... These automatic phone systems are the real criminals!

dunstonh

Just to add to the ERC side and the GMAC ERC post, here is a response from the FOS which rejected a complaint made by someone about an ERC.

http://www.financial-ombudsman.org.uk/publications/ombudsman-news/32/bank-case-32.htm

Orrible

dunstonh wrote: »

You accept the tie in because of the terms of the deal. You sign a contract to agree that tie in and both sides agree to honour that contract. However, there is an agreement that allows you to break the contract with you paying the charge.

When you look at most mortgage deals, such as discount and cashback you tend to find that the cost over 5 years (or the deal period) is little different. Its just a different way of giving you extra money. You cannot expect to get say 1% a year discount for 5 years without a 5 year tie in existing. The lender has to finance/cost that deal and you breaking it would cost them.

If you get rid of the ERC, then you get rid of every fixed rate, cashback and discount mortgage there is.

Unless it falls under the unfair contracts ruling then it is legal. A penalty which is similar to the benefit being received if fulfilled is hardly going to be considered unlawful.

With regard to the ERC, what I am saying is this:

2 year deal at 5.8% (hardly a great reduction)
£15,000 to redeem mtgage (7 months left)
mtge payments would have been £8,750..

Go figure. This is hardly covering their costs and risks is it. There must be a claim for the amount they are asking for (taken)?

dunstonh

This is hardly covering their costs and risks is it.

You have chosen a lender that deals in high risk lending. The deal would not be that great against mainstream lenders but for GMAC, that is a good rate. They would have secured that rate almost certainly by borrowing the money themselves or negotiating terms on the money markets. If you pay it off early, they would incur costs because they have a tie in as well on the money they borrowed. The remaining term isnt long enough for them to use the money to lend to someone else.

There must be a claim for the amount they are asking for (taken)?

No. The charge is valid and fair and as you can see from the link I posted, the FOS agree it is fair.

It's not as if you were forced into this deal. You chose it and you knew the tie in and the consequences of redeeming the mortgage during the tie in period. It's fully documented on the contract you signed and your solicitor would have pointed it out to you (assuming you used the solicitor to check your offer letter. Many dont nowadays to save a few pounds as they take on that responsbility for themselves).

You need to understand how mortgages work to see why it is fair. They are not using savers money here. They have borrowed it to lend to you. It has come from investors who have been given a fixed rate of return for 2 years.

Paying back early creates a chain of events which goes all the way to where the money is sourced. The investors have a 2 year fixed deal so that has to be honoured and cannot be broken without penalty. If you repay early, the investors still have to be paid right up until the period ends. So, GMAC have to honour their end or pay an equivalent penalty. So, they pass that liability on to you.

Tripledrop

And, 5.8% actually is a great rate at the moment. I just had my 3 yr fixed deal with (prime lender) HSBC @ 5.9% finish. The best they could then offer was 6.29%. Therefore, you have a good rate, with a lender that deals with high-risk lending, so not only is it fair to them to have an ERC, but imho, entirely correct!

Isn't there any way you can wait 7 months until you remortgage? Save yourself £15k?

DropDebtFred

Hi,

Has anyone actually tried this? If so, any success or failure stories?

Thanks in advance,

Fred

davetmorgan

Hi Martin Hope you are having a nice Christmas I have been reading the article on mortgage arrears charges is it right for a mortgage company to charge you for having your own insurance cover or can this too be reclaimed as an unfair charge.All the best for 2008 and keep up the good work..Dave:beer:

dunstonh

s it right for a mortgage company to charge you for having your own insurance cover

This is a valid charge and acceptable.

can this too be reclaimed as an unfair charge.

What law says that an admin charge has to be fair?