GMAC's extortionate redemption fees

[SteveF1]

I am new here and have tried my best to read up on a much info re this topic as I could but couldn't find the answer to my questions.

My partner currently has a reduced rate 100% mortage with GMAC whereby she is tied into their 'interest only' mortgage until the end of October 2008, the end of a two year deal she inked with them. The problem is she is struggling to pay the mortgage on the property as she's been paying it alone since her ex decided to up and leave over a year ago and has put the house on the market to get rid of it and move on.

The house is currently for sale but the asking price in the current market reflects the slump its now in and she's just had an offer for £108,000 but with the mortgage totalling around £101,000 and early repayment fees of 6% it means final fees coming very close to the buyers offer. Granted its better than negative equity but this will leave her having to get a loan to cover the costs of the estate agents and solicitors fees which will total around £2500 and I think thats wrong especially as she has single handedly renovated the house to a good standard and got herself into debt in the process.

The small print is clear, she signed a contract saying she'd pay 6% of the overall loan if she repayed before the two years is up but it still doesn't seem right that £6000 is paid to GMAC as a penalty for what will be a few months remaining of a terrible mortgage deal to begin with. My partner has never defaulted on any payments and has paid her mortgage every month without fail despite paying it on her own.

She contacted GMAC to ask them to reduce the ERC as a gesture of goodwill as she was a good customer and was near the end of her 2yr deal but they refused and stated she had to pay up. The current buyers of the house won't wait until the end of October to complete and we don't want to lose the sale as we want to move on. With my partner struggling to pay the bils for the house it'd total near £6000 to pay the next 5 months worth of bills on the house anyway so she feels trapped and near forced to pay the ERC despite it feeling morally wrong.

Most of these topics are tailored towards customers of GMAC who have already paid the ERC and are trying to claim it back but what do we do when we want to sell the house, pay the mortgage off and not have to pay the extortionate ERC. Do we have a leg to stand on or do we have to pay it and move on?

Any advice will be appreciated.

Thanks

[gizmo111]

I'm afraid you will have to pay the ERC.

Read here ~~~**IMPORTANT** Mortgage Claimants ~ PLEASE READ ~~

Claiming back ERC's has been tried and the cases lost.

[SteveF1]

Is it worth sending them a letter demanding they break down the costs involved in the ERC and threaten them with legal action or going to the OFT or FSA or has that all been tried and failed?

Are they likely to lessen the ERC or will they stick to their guns as some are saying GMAC, like all other sub-prime lenders are like vultures and would rather see someone in the gutter so they can get their hands on your last tenner....

[gizmo111]

It is not worth asking them to break down costs as it is not a penalty, it is also not worth threatening legal action, as there is none you can take that would give you the outcome you would like.

I think it is highly unlikely that they will reduce or waive this ERC.

[Simmo81]

Is your partner buying something else? I spoke to GMAC (now Oakwood homeloans) a couple of days ago as my property is up for sale with an ERC of nearly £5000, which means I would come out with negative equity. They said if you port the mortgage, i.e buy something else they drop the charge or if you go with another mortgage company they will drop the charge. Don't know how viable getting another mortgage is on a property thats up for sale, this is something I need to look into (does anybody else know?) But if it is possible to do this if you could find a lender with a lower ERC, then use this to barter with GMAC?

[Bona]

GMAC like many have changed there T&C's as it was costing to much what you have to do is decide what is best for you you may well have to pay and grit your teath we sold our house and are now fighting GMAC they have paid us backsome but are flalty refusing to pay more BUT I will not let it go They can do nothing to me any more but I can cause them an awful lot of grieve which I fully intend to do at the moment they are allthough they try to get round it in breach of an order which we will persue to Europe if we have to because there pracatises are wrong .I had a telephone call saying there chairman Steven Knight wanted to know if we had been treated unfairly We had we proved it and guess what he has totally ignored it and now wont answer any of our letters thats the type of people you are dealing with I will get what is owed to me
sorry about the rant I dont think there is much you can do but pay up get shot of them and then persue them

[MortgageTalk]

If another property is to be purchased then using GMAC as the mortgage provider might have provided a refund of the early redemption penalty. Unfortunately, GMAC is one of numerous lenders that have withdrawn all their schemes (May 200 due to a lack of funding liquidity in the market and they do not yet have a date when they will begin lending. Although you do not mention a date for Exchange of Contracts or Completion, October is not far away and you may be able to extend completion until then?

Failing this, I have used the following option on a couple of occassions. Consider asking the purchaser to 'rent' the property (this will give then access to their new home) and then complete the sale process in October. This has several advantages:

• You hold on to your purchaser
• Your purchaser does not loose their sale or compromise the chain
• They move into their new home on time and pay an agreed rent
• The rent helps pay your existing GMAC mortgage
• You avoid the high early redemption charges
• You will have Exchanged Contracts and the purchaser knows that completion will be in October and the home theirs

OK. You are supposed to inform your lender if you rent out your property, but................!

If you do decide to go down this road, don't forget to inform your building Insurer that you are renting for a few months.

[mands1971]

Help.

Upon paying my mortgage off in 2004 I was charged a admin fee of £75 and a redemption fee of £692.57 and a funding fee of £692.57. Can I claim these back, I was thinking of just writing to them and demanding the money back any advice would be much appreciated.

[MortgageTalk]

I would assume the admin fee (for closing the mortgage account) and redemption fee for redeeming your mortgage whilst a particular scheme had not finished would be contractual charges contained in your mortgage offer and quite easy to check - if you still have a copy of your offer? Why you were also charged a funding fee (the same as your redemption penalty charge) I haven't the foggiest. I have never come across a funding fee payable on redemption!

MortgageTalk

[mands1971]

I am going to drag out my original mortgage offer tonight but I have also sent them a letter asking for a refund with interest, will keep you posted.

[MortgageTalk]

Look forward to their response as I have never heard of a Funding Charge on redemption of a mortgage. Good luck.

MortgageTalk

Please note I am commenting on posts in general and not providing individual mortgage advice or recommendation, which would require precise details of your circumstances.