Remortgages - mortgage arrangement fee

ClarabellaO

I am desperate for advice as to my rights re this matter. I applied for a remortgage over the telephone in Aug and was accepted in principle. Paperwork was sent out to me and I signed it and sent it back with the relevant bank statements, etc. I also sent a chq for £349 - the mortgage arrangement fee requested. Unfortunately, on receipt of my papers the bank refused the remortgage application because I had gone overdrawn on my account during the last few months. They sent me a letter confirming this and when I rang up to find out where my cheque was they said it would be returned to me under separate cover. After many many phone calls to them I have now found out that they actually took the mortgage arrangement fee in Sept, leaving me overdrawn, and they tell me that usually this is non-refundable, even if the application is declined. Is this legitimate? I was never advised of this at any point during the application as, had I been, I would never have applied.

I'd be grateful for any advice.

kjharve

It is unusual for lenders to insist on keeping your upfront arrangement fee in the event you have been declined, especially if it's at initial underwrite stage which it sounds like you were.

I don't believe there's any rule saying they can't keep the fee but it is absolutely definitely worth writing a letter of complaint. They will undoubtably have the ability to refund this fee, normally at the discretion of the particular underwriter. The key point you need to make is that they haven't actually done any work for their money yet.

I would expect you to have reasonable success in this matter. Have a read up on "Treating Customers Fairly" - a new FSA initiative that they are pushing lenders very hard on. My guess would be that you could argue your case goes against at least one of the six principles. Mentioning that might be enough to prove you've done your homework and mean business.