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  • FIRST POST
    • StephNotts
    • By StephNotts 10th Jan 18, 4:58 PM
    • 19Posts
    • 2Thanks
    StephNotts
    Early redemption penalty higher than on offer letter.
    • #1
    • 10th Jan 18, 4:58 PM
    Early redemption penalty higher than on offer letter. 10th Jan 18 at 4:58 PM
    Hi there

    We've just redeemed a buy to let mortgage (we were accidental landlords, long story) and the redemption penalty is higher than on the mortgage offer letter and higher than they advised 6 months ago. There is only 6 months remaining of the mortgage so we were led to believe the final penalty would 2% x .5 The sum they've taken is higher even than 100% of the final year's penalty for 12 months and doesn't include interest. It's just random. I've told them they've made a mistake and they're adamant they haven't. I've asked them to send a full breakdown which they say they don't have to do. Surely I have a legal right to know who they're working this out? It all feels very fishy indeed, particularly as they won't send their workings. What are my rights?

    Many thanks in advance
    Steph
Page 1
    • dunstonh
    • By dunstonh 10th Jan 18, 5:08 PM
    • 93,007 Posts
    • 60,393 Thanks
    dunstonh
    • #2
    • 10th Jan 18, 5:08 PM
    • #2
    • 10th Jan 18, 5:08 PM
    What did they say when you to raised the fact you believe the ERC is different to what the mortgage offer letter says?

    You wouldn't expect them to just say "no its not" but to explain why its not. Especially if you have given them the working to what you think it should be. They should highlight where it is wrong. I suspect they have misinterpreted your request as the response is more typical of people trying to get out of the ERC by asking them to justify it.

    If you post your figures here and what they have charged, we can take a look to see if we can make sense of it.
    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.
    • ACG
    • By ACG 10th Jan 18, 5:41 PM
    • 17,040 Posts
    • 8,927 Thanks
    ACG
    • #3
    • 10th Jan 18, 5:41 PM
    • #3
    • 10th Jan 18, 5:41 PM
    What does your Mortgage offer say they will charge in the last 12 months of a deal? You might find it is around 100 higher than that as they may also be charging some sort of deeds release fee.
    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.
    • kingstreet
    • By kingstreet 10th Jan 18, 5:49 PM
    • 33,564 Posts
    • 18,202 Thanks
    kingstreet
    • #4
    • 10th Jan 18, 5:49 PM
    • #4
    • 10th Jan 18, 5:49 PM
    Typically, the redemption figure will include;-

    outstanding balance
    accrued interest
    early redemption charge
    discharge fee.

    We would need to be able to compare each figure to your expectation. Anything else is pure speculation.
    I am a mortgage broker. 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. Please do not send PMs asking for one-to-one-advice, or representation.
    • StephNotts
    • By StephNotts 10th Jan 18, 7:17 PM
    • 19 Posts
    • 2 Thanks
    StephNotts
    • #5
    • 10th Jan 18, 7:17 PM
    • #5
    • 10th Jan 18, 7:17 PM
    On the offer letter the figure for early redemption charge between June 2017 and June 2018 is set at 3,300 but six months into that period, when it should reduce, they're charging 3,500. There is a separate box for interest and discharge fee all of which are as on the offer letter. This is higher than the figure they quoted me to end the mortgage in October of last year. Presumably they're obliged to show their workings - although they were literally "we say this is right, so it is". They have the money, because they quoted me a figure which seemed right I advised the solicitor to pay them direct. Now I need to get some of it back!!
    • kingstreet
    • By kingstreet 11th Jan 18, 8:55 AM
    • 33,564 Posts
    • 18,202 Thanks
    kingstreet
    • #6
    • 11th Jan 18, 8:55 AM
    • #6
    • 11th Jan 18, 8:55 AM
    Make a complaint and request a refund of the difference between what you believe you should have paid and what you actually paid.
    I am a mortgage broker. 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. Please do not send PMs asking for one-to-one-advice, or representation.
    • StephNotts
    • By StephNotts 11th Jan 18, 9:05 AM
    • 19 Posts
    • 2 Thanks
    StephNotts
    • #7
    • 11th Jan 18, 9:05 AM
    • #7
    • 11th Jan 18, 9:05 AM
    I will but without the figures they're using it's pretty hard to calculate. They claim the figure quoted as highest payable is an estimate! Are they obliged to provide me with this information? I presume they are but nothing would surprise me!
    • TrickyDicky101
    • By TrickyDicky101 11th Jan 18, 9:30 AM
    • 3,035 Posts
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    TrickyDicky101
    • #8
    • 11th Jan 18, 9:30 AM
    • #8
    • 11th Jan 18, 9:30 AM
    What does your mortgage agreement state with regards to ERC payable on early redemption? It should provide something along the lines of "1% of outstanding balance".

    If you get that and then provide the relevant figures either you or we can calculate it for you.
    • Tom99
    • By Tom99 11th Jan 18, 9:40 AM
    • 2,244 Posts
    • 1,522 Thanks
    Tom99
    • #9
    • 11th Jan 18, 9:40 AM
    • #9
    • 11th Jan 18, 9:40 AM
    If the final year redemption charge is set at 3,300 then that's what it will be if you redeem 11 mths or 1 mth from the expiry date.
    • davidmcn
    • By davidmcn 11th Jan 18, 10:03 AM
    • 7,837 Posts
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    davidmcn
    There is only 6 months remaining of the mortgage so we were led to believe the final penalty would 2% x .5
    Originally posted by StephNotts
    "Led to believe" by whom or what?
    • ViolaLass
    • By ViolaLass 11th Jan 18, 10:17 AM
    • 5,385 Posts
    • 7,441 Thanks
    ViolaLass
    Is the ERC a percentage of the amount still remaining? If so, did the amount you owe increase in the last six months?
    • StephNotts
    • By StephNotts 14th Jan 18, 2:51 PM
    • 19 Posts
    • 2 Thanks
    StephNotts
    when we rang to get the early redemption figure in October we were told it would taper. The figure quoted was lower and whilst we accept that it changes, it surely have tapered by now to much lower. That's the issue.
    • StephNotts
    • By StephNotts 14th Jan 18, 2:52 PM
    • 19 Posts
    • 2 Thanks
    StephNotts
    No the amount hasn't increased. Interest only mortgage, exactly as it was.
    • Thrugelmir
    • By Thrugelmir 14th Jan 18, 4:00 PM
    • 58,925 Posts
    • 52,253 Thanks
    Thrugelmir
    when we rang to get the early redemption figure in October we were told it would taper. The figure quoted was lower and whilst we accept that it changes, it surely have tapered by now to much lower. That's the issue.
    Originally posted by StephNotts
    Then the figure quoted was incorrect. Was the redemption figure quoted in writing or just verbally.
    Financial disasters happen when the last person who can remember what went wrong last time has left the building.
    • TrickyDicky101
    • By TrickyDicky101 14th Jan 18, 6:19 PM
    • 3,035 Posts
    • 1,959 Thanks
    TrickyDicky101
    Could you actually check your mortgage agreement please - that is where any ERC you are obligated to pay will be defined. Otherwise, this thread is largely pointless - no-one can state with any certainty why the amount has moved or not as we can't read your agreement!
    • StephNotts
    • By StephNotts 17th Jan 18, 6:55 PM
    • 19 Posts
    • 2 Thanks
    StephNotts
    The agreement states a maximum amount repayable that is lower than that I've been charged just for Early Repayment. I've written to them again asking for their workings. I do think the advice I had on the phone from Clydesdale was wrong however, it's not replicated in writing anywhere which is bloody annoying.

    Thank you for your help everyone, I'll see where I get on reclaiming the difference but their phone advice looks as if it's wrong IF the penalty doesn't taper throughout the final year. Grrr.
    • Thrugelmir
    • By Thrugelmir 17th Jan 18, 7:02 PM
    • 58,925 Posts
    • 52,253 Thanks
    Thrugelmir
    I'll see where I get on reclaiming the difference but their phone advice looks as if it's wrong IF the penalty doesn't taper throughout the final year.
    Originally posted by StephNotts
    At best the ERC will taper annually, not monthly.
    Financial disasters happen when the last person who can remember what went wrong last time has left the building.
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