Thread: A&L mortgage exit fees.

Hi all, I'm not sure if I should be posting this in the A&L section or the mortgage section. I've just joined today, I've tried searching for information but couldn't find help about my specific issue, so be kind if I've done something wrong.

My 'problem' is basically this (it's a relatively good problem to have, I know): I am in the position to clear my A&L mortgage, but the exit fee is now £295 whereas it was £75 when I signed up for the mortgage in 1999. (I've just dug out the original fees leaflet.)

I have a flexible mortgage which can be paid off at any time, i.e. there is no early redemption penalty. The £295 is the fee for simply concluding the mortgage.

I understand that the lenders are being pressured about these fees which have risen unreasonably in the last few years.

My question is this: should I argue about this fee PRIOR to clearing the mortgage, or should I just pay up the £295 and claim it back AFTER clearing the mortgage?

Obviously I would much prefer to pay £75 rather than £295, although even £75 is steep compared to many other lenders.

I am in Scotland, in case that has any bearing on things.

Thanks for your thoughts and help.

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Thanks, that's very helpful. I'm thinking of going in to the branch in person, with the means to clear it and maybe a copy of this letter (adapted) to show them what I intend to do if they insist I pay £295. I'll also take in my original fees leaflet to 'prove' what the fee was when I took it out.

Like you say, there's no point in excessively delaying the clearing of the mortgage simply to argue this point, so I'll pay it if necessary and then claim it back immediately afterwards.

Thanks again.

Here's an update. I wrote the following letter and took it along to the branch with my chequebook in order to clear the mortgage. The 'manager' was sympathetic and said it was a good letter, but told me she had no authority to waive the fee and that I could use their free phone to call the call centre and see if they would accept it.

Letter I sent:

<My address details>

Alliance & Leicester plc
Carlton Park
Customer Services
Narborough
Leicester
LE19 0AL

3 September 2008

Dear Sir/Madam,

mortgage account number xxxxxxxxxxxxxxxx

I am in a position to clear this mortgage and would like to do so with immediate effect. However, I am extremely disappointed to see that you have decided to increase the exit fee from the £75 stated in my original charge leaflet (issued to me in December 1999 when I took out the mortgage) to the current £295, an amount which I find to be wholly unjustifiable.

It seems that the FSA agree with me. On the 26th of January 2007, as I'm sure you are aware, they issued a statement of good practice regarding mortgage exit administration fees (MEAFs) as per the following link: <web link (forum won't allow me to post it cos I have less than 5 posts)>

Having read this statement, I feel that the current fee of £295 is unenforceable. The FSA states:

“if a MEAF term is drafted to enable the lender to recover the cost of the administration services which a lender provides when a customer exits the mortgage, the lender should ensure that the MEAF represents in fact the cost of the lender's administration services. A failure to do so is also likely to be a breach of contract.”

When I took out this mortgage, I intended to pay it off as soon as possible, therefore, the mortgage exit fee was high up my list of considerations when I chose this product. Since I knew at the time of agreeing our contract that the fee was £75, I am perfectly willing to pay this, despite the FSA's view that this charge should only cover the ACTUAL costs involved (which I don't believe to be as high as even £75).

If you do not agree to keeping this charge at £75, then I will pay the £295, under protest, and will immediately require that you provide me with a Breakdown of the administrative costs involved in terminating my mortgage and further require that you refund the difference. In my view, this should make the fee much less than £75. Many of your competitors charge as little as £50 or less, in today's market.

Yours faithfully



babykitten

I phoned the call centre and was told that they couldn't change the fee, that was what it was. They said I could complain but that they have 7 days to respond to complaints and that it would delay the clearing of the mortgage. So I decided to pay it, under protest. The branch manager offered to take my letter and start the complaint proceedings immediately from that branch, which I thought was fairly decent.

So I cleared it and left.

Something to note is that my fee was actually 'only' £195 as I had taken out the mortgage before August 2004. Their current leaflets didn't mention this, as far as I could see.

Anyway, today I received a letter with a cheque for £120. The letter said the following:

...Alliance & Leicester first introduced a single administration fee of £195 from 5 January 2004 called the Early Closure Administration Charge and this fee was increased in August 2004 to £295.

However, we have decided to reduce the fee payable to customers who took out their mortgage before August 2004 to the original level...

There's a few points here:

1 I had a fully flexible mortgage that could be cleared at any time (after the first year) without penalty, so, calling this charge an "Early Closure Administration Charge" sounds to me like a penalty payment. I'm guessing this is why they have decided to waive it for me, but post August 2004 customers may be able to argue the point that this is clearly a penalty payment.

2 There is another issue related to Scotland. Scots Law (so I am told by A&L, but also other sources) requires that the lender's charge over a property be removed only on the instruction of a solicitor. I got a letter from A&L to confirm this. So, in effect, the only thing A&L had to do was post me my deeds. Clearly this does not cost £195 or £295, or even £75.

3 I had lots of problems with getting A&L to send me my deeds recorded delivery. They firstly said I could request it, so I did, twice, then when I phoned up to confirm that they would, they said they had already sent them standard post. I was livid. Anyway, they actually turned up a few days later, recorded delivery! THEN, I got a letter a few days after, saying they would soon post my deeds. Left hand doesn't know what right hand is doing.

In my original letter, I gave them the option of £75 now, like we agreed, or if I was forced to pay a higher fee, that I would pay it under protest and then insist on a breakdown of costs, which would likely result in them having to give me more back.

So, I'm wondering if it's worth my while to reject their offer of £120 and push them further. I think I've got a strong argument, especially with this issue of them not having to change the land registry entry due to me being in Scotland. This is going to cost me a good bit more for solicitor's fees. Essentially their costs are solely the postage of deeds for Scottish properties.

Do you think I have a case for pushing for more? Should I cash this cheque as part settlement, or should I not cash it at all? I'm just wondering if me cashing the cheque is an implied acceptance of the offer. Maybe I should do nothing with the cheque until I see what they say?

Thanks for any help.