Mortgage Early Redemption Charge

MgStu

Hi, I am currently in dispute with a lender regarding a charge they have added because of a misunderstanding, it could be I am wrong in my understanding.  I have had numerous calls with the lender to redeem the mortgage on 31/1/22.  On a letter they mentioned if I redeem before the 31/1 there will be a charge.  I had a subsequent call with the redemption dept where I asked if I could make payments over two day and was told "you can pay anytime up to 31st" so I did paying two amounts which equal the total required the last payment being made on the 20/1.  I understood the money would then be used on the 31st to redeem the mortgage - however this was regarded as early repayment and a fee added to my account of £1,700.   Is this right considering they have a recording of their agent telling me I can pay anytime upto 31st?   They of course point me to the letter stating I'll be charged if I pay early.

Any advice gratefully received, even if it is to call me stupid for paying early! 

sammyjammy

If you have a letter stating if you replay before 31/1/22 you will be charged early redemption fee then I believe that will stand, what the customer service agent said was correct she just didn't add that if you did so you would be subject to the charge.

I don't understand why you didn't just wait until 31st?  Was there a particular reason you couldn't?

You can try and appeal to their better nature to bypass the charge but it doesn't seem likely.

MgStu

Hi @sammyjammy

Thanks for the reply.  Yes I agree regards the conversation with the agent - that is my main / only argument really and the fact that I had spoke to them many times regards redeeming on the 31st.  What I hadn't appreciated and wasn't explained to me was that once the full amount was received the redemption happens.  My thinking was I would get the money into their account so it was ready for the 31st - I hadn't appreciated the mechanics, automatically triggering the redemption.

I would like to add that byt that measure, the first payment I made the previous day probably exceeded the overpayment limit and no mention was made of that by the Agent either - she should have said, pay by CHAPS on the 31st 'fullstop'.

So you think as I have a letter I don't have an argument really?

MWT

MgStu said:

On a letter they mentioned if I redeem before the 31/1 there will be a charge..

I had a subsequent call with the redemption dept where I asked if I could make payments over two day and was told "you can pay anytime up to 31st"

Those two statements are not in conflict, they warned you that redeeming before the 31st would incur a charge.

You asked if you could pay over more than one day and were correctly told that if you wanted to do that you could but the payments would have to be made by the date you wanted to redeem the mortgage.

They do seem to have been clear enough and had you asked if that would still incur the charge they would have said 'yes', but that was already clear from their letter.

Thrugelmir

MgStu said:

My thinking was I would get the money into their account so it was ready for the 31st 

Where did you think it would go. There's no holding account. The mortgage company credits the money received from you on the day of receipt. Would be in serious regulatory trouble if it didn't do so. 

MgStu

Thanks for the comments - it was my naivety and lack of understanding of the process - however I do think it should have been made clear on the phone call if I paid the total before the 31st I would incur a early redemption charge.

Hopefully this conversation will help someone else avoid this situation - an expensive lesson.

MgStu

Thrugelmir said:

MgStu said:

My thinking was I would get the money into their account so it was ready for the 31st 

Where did you think it would go. There's no holding account. The mortgage company credits the money received from you on the day of receipt. Would be in serious regulatory trouble if it didn't do so. 

I thought my request to redeem on the 31st was the instruction.  I am not a finance expert and that is precisely why I phoned them 2-3 times to check things.  My tihnking was I don't mind paying in a little early if it means I won't miss the "due" date.  As I said on my other post - an expensive mistake that it looks like I have no grounds to argue against.

MgStu

sammyjammy said:

If you have a letter stating if you replay before 31/1/22 you will be charged early redemption fee then I believe that will stand, what the customer service agent said was correct she just didn't add that if you did so you would be subject to the charge.

I don't understand why you didn't just wait until 31st?  Was there a particular reason you couldn't?

You can try and appeal to their better nature to bypass the charge but it doesn't seem likely.

I tried appealing to their better nature but it seems they don't have one :-)

ACG

If you have a letter saying payment prior to the 31st will incur the ERC you have been told. 
However, I think you could also argue that if the phone call was made after the letter, then the rep theoretically could have done something behind the scenes which then supersedes the letter. 

Take it to the ombudsman. My view is that mistakes happen, we all make them but in our industry we have to put you in the position you would have been had the mistake not happened. That means refunding you the ERC minus 11 days interest which you did not incur for paying early. 

Had you been given the correct information on the phone there is no way you would have paid it off, its reasonable to assume you would have held off 11 days. 

MWT

ACG said:

Had you been given the correct information on the phone there is no way you would have paid it off, its reasonable to assume you would have held off 11 days. 

Certainly can't hurt to try the Ombudsman, but just out of curiosity, which part of the information given in the phone call would you consider to be 'incorrect'?

The person on the phone could have reiterated the warning about the ERC, but as you said, it had already been given, so in what way was the information provided 'incorrect' ?

ACG

I had a subsequent call with the redemption dept where I asked if I could make payments over two day and was told "you can pay anytime up to 31st"

That is incorrect by the sounds of it. 

The OP was given the wrong information. They acted upon that incorrect information. The person on the phone made a mistake, thats fine mistakes happen. But its the companies job to put it right as they need to train their staff better. Had the OP been told he would have to wait until the 31st or 1st, he/she would have done I am guessing as it was 11 days.