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  • FIRST POST
    stash36
    Mortgage Indemnity Fees - Can we claim back?
    • #1
    • 12th Feb 07, 8:20 AM
    Mortgage Indemnity Fees - Can we claim back? 12th Feb 07 at 8:20 AM
    I put my reclaim of mortgage discharge fee up on this board yesterday, and mentioned that I'd like my 800 indemnity fee back. A couple of people agreed with me so I'm posting this again in its own thread to see what people's views are.



    stash36
    Halifax.

    Fee was 40 in '95, and 75 when I left them in '01. Phoned up and cheque for 35 in post.
    A collegue went into his Halifax branch and left with a similar cheque within 15 mins.

    Now if could get my 800 mortgage indemnity fee back, I'd be even more pleased. Surely that's also got to be found unlawful some time soon.

    Grabbit
    Now that is an even better (and more lucrative) idea than reclaiming exit fees. If my memory serves me correctly the indemnity fee was an insurance fee that the mortgage company charged you so if you defaulted they could claim against it. The mortgagee never received a service for it, were never told what it entailed, and never signed a contract for it - BUT THEY CHARGED YOU IT ANYWAY.
    And if you didn't have one they wouldn't give you a mortgage.

    So if bank and mortgage charges are meant to reflect the true cost of the service provided then what was the true cost of an indemnity that one was charged something like 1000 for ?

    stash36
    Exactly Grabbit. We struggled to get a mortgage back in '95 and had to pay the 800 idemnity fee with the Halifax or we were snookered. I remember it being termed as funds they invested in case they had to sell the house on at a loss in future. In they end they didn't need to do this as I changed lenders, paying them off in full, so where's my 800 quid?


    So, has anyone ever looked into this before?
    I'm going to write to the bank and ask them their views, and why I've never had part of the fee returned.
Page 1
  • toonfish
    • #2
    • 12th Feb 07, 8:29 AM
    • #2
    • 12th Feb 07, 8:29 AM
    it's an insurance policy to protect the lender because you were considered a high risk - I don't like them but why on earth should it get refunded?

    What about the vegetables I never got around to eating - should I get a refund from Sainsburys for those?
    I am a Mortgage Adviser
    You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it.


    This signature is here as I follow MSE's Mortgage Adviser code of conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.



  • arkie
    • #3
    • 12th Feb 07, 8:33 AM
    • #3
    • 12th Feb 07, 8:33 AM
    Mortgage Indemnity= is a type of insurance policy the lender buys out of the Mortgage indemnity Fee you have been charged. The policy covers the lender (not you) should they have to repo your house. If the house then sells at a loss the lender claims on that policy. The insurance company then persue you for the amunt of the shortfall.
    So in other words ... NO you cant claim

    well said Toonfish
    I am a Whole of Market Mortgage Adviser
    You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it.
    This signature is here as I follow MSE's Mortgage Adviser code of conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.
  • stash36
    • #4
    • 12th Feb 07, 8:47 AM
    • #4
    • 12th Feb 07, 8:47 AM
    why on earth should it get refunded?
    by toonfish
    Because the policy was to cover 25 years, but was no longer required after 5 years.
    • LisaT186
    • By LisaT186 12th Feb 07, 8:49 AM
    • 221 Posts
    • 83 Thanks
    LisaT186
    • #5
    • 12th Feb 07, 8:49 AM
    • #5
    • 12th Feb 07, 8:49 AM
    A Mortgage indemnity fee is used by the lender to buy an insurance. If they don't claim off it there is no refund. You wouldn't expect to get a refund of car or home insurance if you didn't claim. You pay the premium as you are asking the lender to take a risk with lending to you at a high Loan to Value.

    All that can be done is to shop around for lenders that don't charge or factor it in to your comparisons when deciding on the best deal.
  • danjberry
    • #6
    • 12th Feb 07, 10:59 AM
    • #6
    • 12th Feb 07, 10:59 AM
    why not ask your lender if you can claim back the amount of interest you paid them on your mortgage
    • dwsjarcmcd
    • By dwsjarcmcd 12th Feb 07, 11:48 AM
    • 1,712 Posts
    • 917 Thanks
    dwsjarcmcd
    • #7
    • 12th Feb 07, 11:48 AM
    • #7
    • 12th Feb 07, 11:48 AM
    If you didn't want to pay the fee you should have either looked for a product that didn't charge it (in essence they all do for higher LTV cases, they are just priced into the cost of the loan), save up for longer until you didn't need to pay for them or not buy the house.
    • dunstonh
    • By dunstonh 12th Feb 07, 11:49 AM
    • 97,974 Posts
    • 66,132 Thanks
    dunstonh
    • #8
    • 12th Feb 07, 11:49 AM
    • #8
    • 12th Feb 07, 11:49 AM
    Because the policy was to cover 25 years, but was no longer required after 5 years.
    But it could have been and still could be. That is what insurance is about.

    I really find it absurd at the things that people are trying to claim for at present.
    I am an Independent Financial Adviser (IFA). Comments are for discussion purposes only. They are not financial advice. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • toonfish
    • #9
    • 12th Feb 07, 11:52 AM
    • #9
    • 12th Feb 07, 11:52 AM
    why not ask your lender if you can claim back the amount of interest you paid them on your mortgage
    by danjberry

    nice one - I'm going to try that!
    I am a Mortgage Adviser
    You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it.


    This signature is here as I follow MSE's Mortgage Adviser code of conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.



  • stash36
    Thanks for the sarcastic comments from the advisers.
    I don't think it's a fair charge and, nothing ventured, nothing gained.
    I'll let you kow how I get on.
  • danjberry
    Thanks for the sarcastic comments from the advisers.
    I don't think it's a fair charge and, nothing ventured, nothing gained.
    I'll let you kow how I get on.
    by stash36
    why is it not a fair charge? they have had to pay out for it in the first place so why should they be out of pocket by refunding it?
  • oscarsacco
    I have often wondered about this also; We paid a MIG on our last place (high LTV), on a 30 year mortgage - we only ended up staying there for 2 years. Now, if I don't claim on my car insurance I wouldn't expect to have the premium refunded. However, if I cancelled the policy after a couple of months I would expect to get at least half of it back...
    • MarkyMarkD
    • By MarkyMarkD 12th Feb 07, 3:16 PM
    • 9,795 Posts
    • 4,216 Thanks
    MarkyMarkD
    The biggest risk on these types of policy is at the start, both because people find they can't afford the mortgage and simply walk away (and they have little personal money invested in it at that stage) and because of house price inflation reducing the insurer's exposure.

    So if any refund was due, calculated on the basis of the period at risk, it would not be very significant.

    Five years is longer than most people have their mortgage for in any case - if premiums were calculated on the basis of time on risk, you would have paid MORE not LESS.

    As for Grabbit's comments:
    The mortgagee never received a service for it, were never told what it entailed, and never signed a contract for it - BUT THEY CHARGED YOU IT ANYWAY. And if you didn't have one they wouldn't give you a mortgage.

    So if bank and mortgage charges are meant to reflect the true cost of the service provided then what was the true cost of an indemnity that one was charged something like £1000 for
    by Grabbit
    ... how many things does s/he want to get wrong in two paragraphs?

    Never received a service for it - you received a mortgage which otherwise you wouldn't have got because it wouldn't be worth the lender accepting that level of risk based on the interest you were paying.

    Were never told what it entailed - you should have asked. But in any case, you don't need to understand it - it's simply a fee which the lender chooses to charge as they are legitimately allowed to do.

    Never signed a contract for it - it was included in your mortgage offer, which you accepted by signing the mortgage offer. Offer & acceptance = contract. D'oh!

    "So if bank and mortgage charges are meant to reflect the true cost of the service provided" ... the FSA have emphatically NOT stated this, even in the context of MEAFs. They have actually stated that lenders can charge any amount that they like, without any relationship to costs, as long as they notify the borrower of the amount due up front.

    Why are people so daft about fees for financial services? Nobody suggests that you should be able to walk into Sainsbury's and demand to pay cost price for everything. It's no different with financial services. As long as you are told what mortgage fees are due, up front, then they are completely legitimate and there is no case to argue for a refund just because you don't like them, or because they involve an element of profit for the lender. Lenders exist to make money, not as a form of charity.
    • tigerminxy
    • By tigerminxy 12th Feb 07, 3:29 PM
    • 112 Posts
    • 29 Thanks
    tigerminxy
    Thanks for the sarcastic comments from the advisers.
    I don't think it's a fair charge and, nothing ventured, nothing gained.
    I'll let you kow how I get on.
    by stash36
    I'm not an advisor and I think you're wrong to think you should get a refund on the charge. If there's any unfairness in it, it's more to do with the charge itself, not the fact that you don't get it refunded if you redeem a mortgage.

    However, nothing ventured, nothing gained and good luck to you if you manage to get it back.
    • MarkyMarkD
    • By MarkyMarkD 12th Feb 07, 3:37 PM
    • 9,795 Posts
    • 4,216 Thanks
    MarkyMarkD
    One thing I forgot to mention. Dwsjarcmcd (complicated name to type, that one) correctly points out that those lenders who do not charge mortgage indemnity insurance (or higher lending charge, to use its new name) generally charge higher interest rates on higher percentage loans.

    It's all swings and roundabouts, and neither approach is inherently any fairer IMHO.
  • millsy1980
    Put a bigger deposit down!!!!!
    Thanks for the sarcastic comments from the advisers.
    I don't think it's a fair charge and, nothing ventured, nothing gained.
    I'll let you kow how I get on.
    by stash36
    Here is another for you, if you didn't want to pay it then put a bigger deposit down. 25% would do the trick, or did you not have this and couldn't wait the time it would take to accumulate it?
  • regularsaver1
    Yeah, as above says - you only get charged a higher lending charge if you don't put a bigger deposit down
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