I have a sale going through on my house, hoping to complete around 8th December, however this created a problem for me, my Mortgage Early Redemption Period does not expire until 31st January 2007, which meant I had an ERF of nearly £8000 to pay for settling my mortgage 6 weeks early.

So on Saturday I drafted a pretty strong letter and sent it Recorded Delivery to G-MAC, Monday only one business day later I receive a phone call stating they will waive the ERF but will charge me interest from the date of Early Redemtion to the end of January 07 when the period would have expired.

In effect it will cost me around £1500.00 or less if I complete later, but I am still around £6000.00 better off, probably the most profitable letter I have ever written.

This morning I received that agreement in writing from G-MAC, if anyone is interested in seeing the letter I wrote, I will post it here later.

Just thought it may help others.

Chris

result m8!!

3 letters and an MCOL against Birmingham Midshires netted me £5120,yet you get knobs like citi farting about for as long as they can drag it out!!

well done!!

Here is the letter I sent to GMAC, I pinched bits from all over the place, added my own elements and wording and voila!!

 

GMAC RFC Ltd

Innovation House

Unit 12a Mead Way

Padiham

Burnley

BB12 7NG

 

 

3rd November 2006

 

Re: Account Ref

 

Dear Sir/Madam

 

I am in the process of selling my property, I have a purchaser lined up and we are anticipating a completion date mid December.

 

As the period for early redemption charges expires in January 2007 approximately one month later, I write to request the early redemption charges, are therefore waived.

 

I understand that the said charges are in all likelihood disproportionate to the costs that you would actually incur. As such, this penalty is unlawful at Common Law, Statute and recent consumer regulations and would constitute a penalty under the Unfair Terms in Consumer Contracts legislation. Such disproportionate charges are considered to be unfair per se by the OFT who reported on 5th April 2006 and are therefore presumed to be unlawful in the absence of specific proof to the contrary.

 

If you believe that the charges are proportionate to the costs you may incur as a result of the early redemption of my mortgage, could you please demonstrate this by providing a full breakdown of those costs or a pre-estimate of your losses. Please note that I do not require an explanation as to why this charge was made; I am fully aware of the terms and conditions of my mortgage. What I require is a breakdown of your costs in order to reassure me that the charge is justified.

 

Having taken legal advice on this matter it is very clear, as you will no doubt be aware, that English contract law requires such charges to be a genuine pre-estimate of your losses. In the case of Castaneda and Others v Clydebank Engineering and Shipbuilding Co Ltd., (1902) 12 SLT 498 the House of Lords held that a contractual party can only recover damages for actual or liquidated losses incurred from a breach of contract as opposed to a charge which represents a penalty. This was upheld in the case of Dunlop Pneumatic Tyre Co Ltd v New Garage and Motor Co Ltd [1915] AC 79. In addition to this, your charges would represent an unfair term of contract which is contrary to the Unfair Terms in Consumer Contracts Regulations 1999 (SL. 1999/2083). Your charges would constitute an unfair penalty under Schedule 2 of the said regulations which provide an indicative and non-exhaustive list of terms which may be regarded as unfair. Under paragraph 1(e) of schedule 2 this specifically includes terms which have the object of requiring any consumer who fails his obligation to pay a disproportionately high sum in compensation.

 

I would also like to bring to your attention the following statement by the Office of Fair Trading:

 

A term in a mortgage agreement which requires the borrower to pay more for breaching the contract than actual costs and losses caused to the lender by the breach (or a genuine pre-estimate of that) is likely to be regarded as an unfair penalty and to be unenforceable at Common Law and (in a consumer mortgage) under the Unfair Terms in Consumer Contracts Regulations.

 

The fact that I signed the mortgage offer containing the term relating to the early redemption charge does not make this term enforceable, as I’m sure your legal department are fully aware.

 

I would also like to advise that if you do not accept my request then you will leave me with no alternative but to seek redress through the Courts.

 

I trust this can be sorted out quite amicably and I look forward to your earliest response.

 

Thank-you for your help and co-operation in this matter.

 

 

Yours faithfully,

 

 

etc etc

 

I hope it helps.

Chris

result m8!!

 

3 letters and an MCOL against Birmingham Midshires netted me £5120,yet you get knobs like citi farting about for as long as they can drag it out!!

 

well done!!

Yes you got to get what you can from whoever you can! I am being messed about on my two other claims by the courts, but I am not finished yet and this one was a nice motivator to keep me going!

I received a letter yesterday from my Solicitor who is handling the conveyancing, with a mortgage redemption statement enclosed, he points out they require a ERC of over £7200 paying on completion. It was dated the day before I received my letter from them stating they agre to waive their ER charges.

He doesn't know I had already written to him stating I have got them agree to waive the charges and it is all in hand and being taken care of! A copy of letter from GMAC also sent to him with the letter. I think my solicitor will be surprised I have this as he once told me they will not waive the ER fees, or at least he thought they would not!! lucky I didn't take his advice hey!

Chris

 

I think my solicitor will be surprised I have this as he once told me they will not waive the ER fees, or at least he thought they would not!! lucky I didn't take his advice hey!

 

Chris

Nice one Chris, well done, I shall be borrowing your letter, and editing it to my needs, thanks very much, and don't worry, I shall put it back as I found it, no coffee cup marks etc!

Nice one Chris, well done, I shall be borrowing your letter, and editing it to my needs, thanks very much, and don't worry, I shall put it back as I found it, no coffee cup marks etc!

No problem just edit it to suit your own circumstances!

Thats fabulous news Chrismc!

A lot of people are chasing GMAC and this gives them hope!

Well done and don't forget to fill out the survey.

Well finally completed on Friday and GMAC waived their charges, they tried to claim them up until the day, a case of one hand not knowing what the other is doing but as I had it in writing from them they couldn't.

So as agreed they waived the ERC's and I just paid them their loss of interest up to the end of January 2007. Saved me around £5700, still waiting for exact figures from my solicitor and his statement.

Hello Chris

What a great result for you.

Any idea how I would go on with the issue I have below..any tips would be great....

Issue:

I suffered a serious stroke in Jan 07 :-| and have been battling ever since with my insurer for them to payout my Critical Illness claim. Last month after an Ombudsman rulling the insurer finally settled! Which was just great for my young family (I am only 36).

I had in truth given up all hope of ever getting anything back at all and had to re-morgage at the end of August 2009. This had a early redemption penalty of £3500. Since we have only paid 1 mortgage payment under the new mortgage when the settlement arrived, I just wondered if there is any advice anyone would have to save paying the early redemption fee.

We want to pay off the mortgage as we would be only £500 better off by saving for the remaining 2 years 10 months the capital payment.

Would a Bank listen regarding this matter? I would just like to be able to put this £3500(which has been a battle to get) away to ptotect my family if something else should happen to me.

Would appreciate and guidance you may offer.

Badger

The Financial Ombudsman Service For the most part, don't bother.

The Ombudsman is an industry arranged service which is under-resourced, takes too long, lacks clear transparency.

You have no idea what evidence the FOS has received from the bank or how your complain has really been handled.

The FOS is the preferred complaints route for the banking industry.

The county court is to be preferred by consumers for its speed, openness, the quality of its awards and also because it will award 8% interest on top of any damages won by you.

The Ombudsman should normally be used to solving little technical difficulties or customer service problems which you have expereinced with your bank.