Mortgage Application Fees

stu_n_jude

Myself and my partner were in the process of moving house in November when the sale fell through (our buyers had pulled out). We had applied for a mortgage from Britannia and had heard nothing since the sale fell through until a few weeks ago when we received a letter stating that they were going to take the £399 application fee out of our bank regardless of the mortgage not going ahead. A few days later they had taken £500 out of our bank without asking. Can they do this?

There are obviously 2 issues here: -

a) can they just take an application fee out of our bank without consent? Surely like the bank charges scenario they should be able to justify the resources they have used while processing the application, thus charging a basic admin fee? The application was at its earliest stages, with only the initial application being submitted. It had not been made clear to us when making the initial application that we would be liable for such a huge fee if the application went no further.

b) Britannia took £500 not the £399 stated within their letter

A friend of ours works for one of the big banks (not ours, unfortunately!) and claims that we could reclaim this money via our bank. Any advice would be gratefully received. Thanks.

dunstonh

A few days later they had taken £500 out of our bank without asking. Can they do this?

Yes. Non refundable application fees are non-refundable.

a) can they just take an application fee out of our bank without consent?

They got your consent on application.

Surely like the bank charges scenario they should be able to justify the resources they have used while processing the application, thus charging a basic admin fee?

They dont need to justify if as its not a penalty charge so its nothing like overdraft penalty charges. Also, they could justify it in reality as they reserved funds for you that they could not use for someone else. Plus your application would have been processed to a point.

It had not been made clear to us when making the initial application that we would be liable for such a huge fee if the application went no further.

Its not a huge fee as arrangement charges go. If you check the mortgage key features illustration, it should be on there. No application is processed without one of those being issued to you first to read.

b) Britannia took £500 not the £399 stated within their letter

That is not right so you should query that.

A friend of ours works for one of the big banks (not ours, unfortunately!) and claims that we could reclaim this money via our bank. Any advice would be gratefully received. Thanks.

Your friend is a little clueless I'm afraid. The only way this charge can be refunded is if it was taken in error, you can persuade them to hold on a bit longer until you find a replacement property or rely on their goodwill.

The Britannia T&C you signed to agree state the following:

Arrangement fee (non-refundable)

With some of our mortgages, we charge an arrangement fee. This fee is used to reserve a particular product or rate for you and will need to be paid at the time of your application. The arrangement fee is non-refundable and may vary for individual products. The mortgage you choose will then be reserved for 6 months once your application has been received along with any applicable fee.

HelpWhereIcan

stu_n_jude wrote: »

Myself and my partner were in the process of moving house in November when the sale fell through (our buyers had pulled out). We had applied for a mortgage from Britannia and had heard nothing since the sale fell through until a few weeks ago when we received a letter stating that they were going to take the £399 application fee out of our bank regardless of the mortgage not going ahead. A few days later they had taken £500 out of our bank without asking. Can they do this?

There are obviously 2 issues here: -

a) can they just take an application fee out of our bank without consent? Surely like the bank charges scenario they should be able to justify the resources they have used while processing the application, thus charging a basic admin fee? The application was at its earliest stages, with only the initial application being submitted. It had not been made clear to us when making the initial application that we would be liable for such a huge fee if the application went no further..

You will probably find that when you signed the mortgage application form you signed to give consent for them to do this. A number of lenders now do this and will say that even if you opt to add the arrangement fee to the loan, it becomes due on application and is not refundable unless they decline you.

They will point out that this was in the Key Features Illustration and/or the declaration on the application form (normally the part where you give them your card/dd details) and that you should have checked and understood it before you signed.

Always worth a try - make an official complaint saying it was not explained to you that the fee was payable whether the mortgage proceeded or not - especially if you took 'advice' from one of their in house advisers - and asking them to refund the £500. Remember to threaten to take them to the Financial Ombudsman Service if they reject your complaint as this will cost them about £400 and will be more than just refuding the money to you.

stu_n_jude wrote: »

b) Britannia took £500 not the £399 stated within their letter.

This is probably where you have the strongest case and may lead to a refund of the whole amount to stop you pursuing the case to the Financial Ombudsman.

stu_n_jude wrote: »

A friend of ours works for one of the big banks (not ours, unfortunately!) and claims that we could reclaim this money via our bank. Any advice would be gratefully received. Thanks.

Under the direct debit guarantee you can only reclaim money that they were not entitled to take so again the fact that they took £500 and not the £399 stated in their letter may be the reason.