Fees applied to a remortgage - with the same lender!!

jdmunro

Hi guys,

First time poster here - so go easy!!
Our mortgage deal with the Abbey recently ran its 26 month course, and threatened to go from a comfortable 4.45% to their standard variable rate. We visited our FA who gave us a couple of options, which when worked out basically boiled down to staying put and converting to Abbey's fixed 5.89% for another 3 years. We decided to take Abbey up on the offer but I was shocked to see that they add a fee of £599 booking fee, a £125 tansfer fee and a £225 account fee. Now, I cant see how they justify these fees when the whole situation involved a 2 minute phonecall and Abbey sending some letters which we didnt even need to sign and return!

Although the fees aren't the same as the recent breakthough on bank charges, or MEAF fees as I understand them, I have to question how legitimate they can be? Does anyone have any advice on appealing/overturning such fees, and is contesting them a common practice?

Regards
James

dunstonh

Now, I cant see how they justify these fees when the whole situation involved a 2 minute phonecall and Abbey sending some letters which we didnt even need to sign and return!

You cant see how they justify it because you dont know the mechanics behind offering a fixed rate mortgage.

have to question how legitimate they can be?

They are totally legitimate. The booking goes towards the cost of obtaining the funds to be able to offer them at that rate. Some fixed rate deals are so low that the whole profit to the bank is in that fee and not the actual rate. Whereas some have a slightly higher rate but lower fee.

The £125 transfer fee and £225 account fee are service charges. Whilst you only think that a 2 minute phonecall is all it takes, it is impossible for Abbey (or any lender) to do a mortgage switch in 2 minutes. At least not without breaking tons of FSA guidelines. The size of the fee they charge here will vary but at £450 its not at a questionable level.

Think of it another way.. You bought a TV 26 months ago. You now want the shop to replace the TV with another new one but not pay for it.

dwsjarcmcd

If you don't want to pay these fees then don't..... just find a deal that charges you a higher rate.

poppy10_2

Exactly. The fees are a payment in return for getting a discounted rate. If you don't want to buy the discounted rate, just go onto the SVR for free.

Tiddler_2

The mortgage account fee is a strange one, as most companies used to charge a fee when you repaid the mortgage - the mortgage exit fee - I'm guessing that because you changed the terms of the mortgage that it was payable for the new mortgage. (Abbey replaced the exit fee with this fee, last year, but should you choose to add it on to the mortgage then they add 3% per year to it. So after 25 years it's around £470/£480!!)

jdmunro

Thanks for the replies guys - I espcially see how that Abbey probably only makes a profit on the fees as opposed to a discounted rate, but a transfer fee surely should only be raised when changing mortgage providers? All they are transfering is the rate! I suppose if I dont want to pay the fees just heading for the SVR is the way to go.

I just wanted to see if anyone else thought they were unjustified - but it seems not!

Thanks
James

beecher

I get the booking fee, but I don't know why you'd be charged a transfer fee or an account fee - are you sure they've been charged? Have you paid for them upfront, or were all the fees added to the mortgage? I'd phone up and check.