Mortgage product switch fees

ColB_2

Hello,

I'm wandering if anyone can tell me if this behaviour is legal! I received a letter from my mortgage provider to sya that some of my mortgage is up for renewal in Aug 08, because its at a rate of 5.45% they can only offer me 5.89% with a fee of £699 to set it up. This percentage is on £18,000, so I rang up to discuss the options because I'm a good customer and didn't feel I should pay £699 again, the lady I spoke to couldn't advise me but gave me some options, 4 different options each with different fees from £999 to £299 set up fees and said I should go for the smallest, a fee of £299 to secure a mortgage rate 0.11% less than the base rate for 3 years, I said no and would rather go to the normal rate for the rest of the mortagage because I would be in the same situation again in 2 years time when another 2/3's of my mortage would be up for review. What I'm getting at is can my mortage provider charge me such a ludicrious fee for staying with them? I mean to secure a mortgage rate of 5.79% for 3 years was going to cost me £999 in fees! The lady I spoke to actually said its to secure the funds for the term of the mortgage, so I said your lending me the same money over the same term for different rates how does that change the fee? Anyway I said no and I would wait until the other 2/3's where up for review and transfer my mortgage somewhere else becuase they didn't deserve my business. Thats better!!

Gailk

It's their money so I guess they can do what they like. You don't have to borrow it from them!

Tiddler_2

The lender does not have to offer you a new deal (and there are some lenders out there, such as Northern Rock, where their customers won't get the chance of a new deal). You originally agreed for a deal for a period of time, followed by a term on their standard variable rate.

You are now being offered a new deal based on the interest rates at this moment in time. These deals are based on both interest rates and fees (they both form part of the product pricing) hence the 4 options they offered.

It does sound like you may have taken the best option though so that you can tie all the mortgage into 1 deal in the future.

ColB_2

Gailk wrote: »

It's their money so I guess they can do what they like. You don't have to borrow it from them!

Unfortunately I do because I can't just lend part of my mortgage to replace the amount that is up for review, I'll just wait.

Rik2008

fixed rate mortgages usually incur admin fees. If you go for a tracker or variable rate you usually can find one that doesnt charge a fee and considering you only owe £18k then you would be better off not going for a fixed rate

minimike2

If you search the forums where similar questions have been asked you will see my standard response to enquiries of this nature.

Ive had it pretty much up to here, and beyond, of peoples view on product fees. Im not sure if its a lack of financial education or what, but the number of people going on about this exact same thing is rediculous.