Remortgaging Caution - monthly interest

Laulen

Be warned...

When remortgaging, some building societies that calculate and charge interest on a MONTHLY basis, make life very difficult for borrowers. Even though buried within their Terms and Conditions, this for me was never adequately explained.

So now, in deciding to change mortgage lender at the end of my fixed rate period I am faced with a Catch 22 position:

5% of £70000 redemption penalty, or an increase of £150 a month, representing the standard variable rate they currently charge. There is no 'window' of opportunity to cease the mortgage without the Chelsea levying one or other of the charges.

In my belief this represents sharp practice on the part of this particular mortgage lender, and is an unfair (albeit legal) business practice. I can't wait to become an ex-customer!

Briefly, the Chelsea have confirmed that:-

1. the redemption penalty on your mortgage with them expires on the 1st
August.

2. your mortgage account with the Chelsea redeems on a monthly basis and
so if we completed at the start of August they will charge you interest for
the whole of August. If we completed at the end of July then there would be
the penalty to pay.

In such cases we would look to complete at the end of August to avoid
the double whammy interest which we will do so here. We will require the
mortgage offer no later than the 15/16th August at the lastest to
achieve this !

Anyone else in a similar situation, or who has experienced similar? How did or do you resolve this?

Laulen

Yes

On 28.7.05 a letter arrived from the Chelsea confirming that 'as a concession the Society will allow you to redeem your mortgage account on the 31 July 2005 without incurring an Early Repayment Charge.'

They went on to state that 'If you redeem any later than the above mentioned date then interest will be charged up until the end of the month within which you redeem your account. This information is stated in the terms of your mortgage within the Getting the Home you Want Leaflet.'

The 'relevant section' states 'If you wish to repay your mortgage in full we will charge you interest on the mortgage up to the end of the month in which your mortgage is repaid.'

Well, yes, they are correct. But they could have been somewhat more explicit about this, especially with warnings about Early Repayment Charges.

My solicitor advises to complete and exchange at the end of August 2005, thereby avoiding any interest payments from my new lender as well as the Chelsea!

So, I must pay the increased amount (£150 more), as it is quite impossible with such a late reply to exchange on a Sunday!

No moneysaving here, but a warning perhaps?
:eek: