> Dear Sirs, > > > > > After consultation with the FSA please be advised that you have a 5 > day period from the date above in which to reply to this letter, > and a total of 8 weeks from the date of this letter to resolve the > matter. > > > I'm sorry that you have not replied to our letter dated 18th August > 2006, we have however received your settlement figure letter of > 17thAugust stating that we would be charged a fee of £3,010.94 as > an early redemption penalty, and £2,481.18 'Funding Fee'. It did > state that if we took out another mortgage with you the fee would > be waived or reduced, but unfortunately we were told by Messrs > Itash, Isaac and Colin James on the phone that we would be charged > this fee even if we did take out another Mortgage with yourselves. > Our Mortgage advisor was also told this by an area Manager. > > > We were sorry that you did not value our custom enough to want us > to stay with you as we have always felt we have had a good > relationship with you, but based on the facts we were given at the > time we have now taken out a Mortgage elsewhere with better rates > and terms. We are now requesting that you waive the Early > Redemption Charge and Funding Fee, as it will put us into debt for > which we will have to pay interest and it is in any event an > unlawful charge. > > > In the case of Castaneda and Others v. Clydebank Engineering and > Shipbuilding Co., Ltd. (1904) 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 oppose to a > charge which represents a penalty. This law was confirmed and > upheld in Dunlop Pneumatic Tyre Co Ltd v New Garage and Motor Co > Ltd [1915] AC 79. A charge will be held to be a penalty if the sum > stipulated for is extravagant and unconscionable in amount in > comparison to the greatest loss that could conceivably be proved to > have followed from the breach. A penalty clause is void in its > entirety and unenforceable. > > > > In addition the early redemption charge appears to represent an > unfair term of contract which is contrary to the Unfair Terms in > Consumer Contracts Regulations 1999 (SI. 1999/2083). Our account > falls within the ambit of Regulation 5 of the Unfair Terms in > Consumer Contracts Regulations 1999 as we are consumers. Your > charge constitutes 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. We would vigorously > contend that this is the position regarding the redemption fee of > £3,010.94. and Funding Fee of £2,481.18, total £5492.12. > > > Furthermore a fee levied requiring us to indemnify you against any > commercial risk to yourself in offering us a reduced interest rate > in order to attract our custom is also contrary to s.4 Unfair > Contract Terms Act 1977. We are confident that a court is likely to > consider this clause to be unreasonable within s.11 of the said Act > as a large commercial institution such as yourselves is in a far > better placed position than us as consumers to bear the burden of > the vicissitudes of business. > > > I would like to bring your attention to 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 terms 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 both at common law and (in a consumer mortgage) under > the Unfair Terms in Consumer Contracts Regulations. A redemption > charge may be regarded as a penalty even if it is expressed as the > price for exercising a right rather than a consequence of breaking > the agreement." > > > We believe that the charge you intend to apply far exceeds any true > cost to yourself as a result of our breach in terminating the > contract early and any genuine pre-estimate you could conceivably > reach. If you disagree, then will you please demonstrate this by > letting me have a full breakdown of the costs to which you will > incur as a result of our early termination, in order to reassure us > that your charges really do reflect your costs. > > > In addition: > > we did not actually want to redeem but our hand was forced by the > information given. > we understand ERC are put in place to stop people taking advantage > of low interest rates, but your rates are not the lowest at the > moment and have not been for a while. > the term that the fee relates to was 5 years and there is less than > 2 to run so we feel it unfair to be charged for that whole term. > The 'Funding Fee' is, we feel, an additional Early Redemption > Charge, this is in itself totally unfair. > We have been excellent customers of yours for almost three years > now and so you have already had tens of thousands of pounds in > interest from us. > > We would like to draw to your attention that if we pay these fees > we fully intend to claim them back. You will thus be put to > additional costs, as if necessary we will pursue this claim through > the courts where there will be further interest added as well as > court fees and possible legal fees, so would ask that you simply > waive the fee now to prevent yourselves from further expense and > inconvenience. > > Yours faithfully,

Hi, I still haven't received a reply at all from First National, I have sent all letters recorded and checked that they have all been signed for which they have. Below is the last letter sent. I am getting really nervous as we are looking to move in about 3 weeks and as you can see they are charging 2 lots of ERC's totalling a whopping sum which we simply do not have so am getting in a panic as to where we are going to get it from and how much in debt it will put us and interest it will cost us. I am thinking of this approach, would you please advise? Thanks again, your help is very much apprecated Dear Sir/Madam, I'm sorry that you have chosen to ignore my past letters about this very important matter. I have notified the FSA of your failure to comply with their guidelines. As detailed in my letters dated 18th August 2006, 23rd August 2006 and 12th September 2006 and we believe your intended penalty of £5,492.12 to be an unlawful charge. AS we are moving house the Mortgage we have with you will be redeemed, as you refuse to enter into a dialogue with me I have no choice to notify my solicitor of the same. I will in 7 days notify her that this amount is in dispute, provide her with details of our letters sent to you, proof that they were received by you and subsequently ignored, and so instructing her not to release the penalty amount to you. If you believe this charge to be lawful you will then have to claim the amount from her, I have to inform you that once I instruct her of the above this will become a separate matter and is likely to incur legal costs, of which her's are £100 per hour. You will of course be liable for these should your claim to the penalty be unsuccessful. I would strongly advise you to take this matter up with me as a matter of urgency before this becomes the case. My solicitor's details are xxxxxxxxx xxxxxx xxxx Yours, Greenstuff

Thanks again Zootscoot, I have just added in the Funding Fee after the ERC in the letter you so kindly did for me and they will get that registered post tomorrow. I so hope we manage to get them to waive it as together it's over £5000 and will clean us out. I'll keep you posted. Cheers, Greenstuff

Hi, I have finally forund out what a 'funding fee' is. Aparantly, it is a charge levied by FN for coming out of the Mortgage early! It is a charge of 3 months interest on the remainder of the loan thats still at the fixed period, the reason it is a different amount to the ERC is that they are charging us ERC on the full amount of the loan even though part of it finished its fixed term in June this year and the rates rose. I am amazed that this is the sort of thing they are getting away with To me this is just another ERC, and unfair penalty, do you think I should include it in my letter? Thanks, Greenstuff

Ok Zoot, thanks again old bean.

Ok, thank you, will just go for the ERC for the moment as thats safer. I am looking through the mountains of paperwork for FN, and there was a High Percentage Advance Charge of £3847.50 added when we took out the Mortgage, that was lumped in with a completion fee as total advance. That figure pretty much, is the balance outstanding figure, (it's an interest only Mortgage), then there is interest due, thats this months payment, then redemption fee,then this Funding Fee of £2,482.18. The plot thickens, they are not open today but I will phone them Monday morning. Thanks again Greenstuff

Hi again, Just wanted to say MIG is also sometimes called High Percentage Advance Charge. Greenstuff

Hey Zoot, MIG is Mortgage Indemnity Guarantee, aka high loan to value fee, charged by Mortgage companies if you have more than a 75% Mortgage, basically it's an insurance policy for them if you default on the loan so they get back what they borrowed you. Absolutly no gain for you, the one paying, whatsoever! Ah, so I have to make sure I don't sign a settlement agreement that's a deed, sterling advise, excellent, thank you, as you say we can't claim back the interest it's more important than ever that we don't get charged this fee as it will put us in mega debt. Thanks again, Greenstuff

HI, I have one last question, sorry, but it could be really important. On the Redemption statement we have from First National there is the ERC (which is actually £3,010.94) and also a 'Funding Fee' of 2,481.18. We are not sure what this is so our Mortgage advisor is looking into it for us, but I think its MIG. There was also a MIG when we bought our last house which we also intend to try and get back at some point. My question is, if we only claim for the ERC now can we still claim back this 'Funding Fee' and the MIG from our last house at a later date? Or are they likely to offer to waive the ERC as full and final settlement meaning we cant at a later date claim the other charges? I would rather go for just the ERC at the moment for ease as we are hoping to exchange on our new house on Friday. Thanks again, Greenstuff x

Sorry if that came accross as patronising, you were making a valid point, of course the people most likely to be stung with charges may have bad credit. I aplogise if I caused offence.

Good idea, I'm claiming from Abbey so will post whether or not they close my account.

Hi there, I don't know if this helps, but this is a big worry for people, if you go to moneysavingexpert.com there is an article relating to this and the unfair charges, it does say the first step before claiming charges is to open a new bank account just in case and has a comparison chart for this. If you are usually in credit certain accounts are better, overdrawn another, and they also take into account how much you pay in monthly, there are links to some sites so you can apply online. Allience and Leicester are a good one at the moment, if it is the best one for you and you know someone who banks with them and they reccomend you, you will get £50, and so will they! I have just opened an account with them and didn't know this at the time so lost out on my £50 If it's the account for you and you don't know anyone to reccomend you I will (happily!) do so!

Zoot! That is brilliant, thanks so much I'd have never figured all that out. U R A STAR! Greenstuff xxx

Hello again, Well, we have not had a response to our letter, we have though had a letter through as we requested a settlement figure. The letter had the figure plus £3,300 early redemption fee, but said this would be waived if a new Mortgage was taken out with them. This is contrary to what we were told on the phone, we did take the names of the people who told us that, and our Mortgage arranger was told the same by the area manager. I dont want to pay the EDC as it's a lot of money to find and will put us in debt so I want to write them a hard hitting letter in the hope they will waive it. We have sorted out a much better Mortgage with Mortgage Express, that is all done and we have the Mortgage offer so I am not worried about ticking them off. I want to put in the legal bits so they will hopefully think its more trouble than its worth, so was thinking along the lines of.. Dear Mortgage people, I'm sorry that you have not replied to our letter dated xx, we have however recieved your settlement figure letter of xx stating that we would be charged a fee of £3,300 as an early redemption penalty. It did state that if we took out another mortgage with you the fee would be waived, but unfortunatly we were told by messers xx, xx, and xx on the phone that we would be charged this fee even if we did take out another Mortgage with yourselves. Our Mortgage advisor was also told this by the area Manager. We were sorry that you did not value our custom enough to want us to stay with you as we have always felt we have had a good relationship with you, but based on the facts we were given at the time we have now taken out a Mortgage elsewhere with better rates and terms. We are now requesting that you waive the EDC as it will put us into debt for which we will have to pay interest. WE would like to draw your attention to the :confused: legal bit please! unfair charge ruling, as we feel this is an unfair charge. We believe this as 1) we did not actually want to redeem but our hand was forced by the information given. 2) We understand EDC are put in place to stop people taking adantage of low interest rates, but your rates are not the lowest at the moment and have not been for a while. ( :confused: is that right?) 3) the term that the fee relates to was 5 years and there is less than 2 to run so we feel it unfair to be charged for that whole term. Another legal bit please? We would like to draw to your attention that if we pay these fees and claim them back there will be interest added as well as possible legal fees, so would ask that you simply waive the fee. Yours, Greenstuff Some help and guidance would be hugely appreciated. Thanks x

oh ok, sterling advice, thanks again.

Hey Zoot and all, Yes, it seems the best idea, thanks for that. My Husband has faxed the letter to them pretty much word for word as I wrote on here, in the meantime we have actually applied for a Mortgage elswhere as the rates are better saving us about £80 a month, and looking round First National have not been any better than anyone else for a while. Hopefully We have covered all bases, the letter from them should hold up in court that they were charging us a redem fee unfairly as we intended to stay with them, another post I read said that their Mortgage company's solicitor said they charged a redemtion fee to cover costs of a lower interest rate but other's rates have been better than FN for a while so that arguments out. With any luck we should have this sorted by the time we move so hopefully wont have to find the redem fee at all which would be very tough at this time. I just had a thought, if we couldnt afford the redem fee and had to borrow it, then proved it was an unfair charge, could we claim back the interest on the loan?? There are also other fees that we will claim, including a £25 charge for arranging our own insurance instead of taking out theirs! Thanks again everyone for posting on here, what valuable info, please keep us up to date. x

Hi Zootscoot, We were going to stay with them as the redemption period ends in August 2008, this is the only reason, we have indeed checked out other mortgage rates and we can get slightly better, although we wouldnt save as much as the redemption penalty in 2 years. We are looking at moving within about 6 weeks. Wehave indeed threatened to move lenders, there response was 'certainly sir'! (To my Husband not me as I'm a Lady). Thanks

Me again, Writing that helped, what I think I'll do is write a letter asking exactly what they intend to charge us, but not as though I intend to do anything, something like.. Account Number xxx Dear Mortgage people, I have the above account numbered Mortgage with you, the amount xxx fixed until August 2008 was secured on our first property, at blah street. We moved this at the same rate and fixed period to our current property, taking out the additional sum of £xx fixed until June 2006. We now wish to move house again, and applied to move the first part of the Mortgage, again with the intention of taking out an additional amount with you as we did before. We have now been informed that this time there will be a redemtion fee for the first part of £xxx. I have phoned First National today and been quoted two different amounts, as well as having the explanation that this is because the mortgage is not portable, this I find confusing as I have moved it once before. Please would you put in writing by return why I would now be required to pay a redemtion penalty despite wishing to keep the mortgage on at the same rate and fixed period as I did before, and exactly what the amount would be? Many thanks Greenstuff Hopefully with that in writing it will be easier for me to claim it back. What do you think? Thanks

Hi, Has anyone had any joy with these guys? I'm about to take them on (being charged redemtion even though not redeeming thread), it seems they are a bit slow on the uptake. Would appreciate any comments Thanks

Sorry me again, forgot to say, if I write to them asking for this in writing there is no obligation for them to reply is there?

Hiya, thanks for the very quick reply! Do you really think that would be the best course of action? You see, (sorry not being very good at explaining) at the moment they are saying they will charge me regardless if I stay with them, so, that as far as I have gleaned from this site, means they have to prove that is a fair charge and thats what its costing them yes? If I stay with them I have to pay a Mortgage arrangement fee, fair enough I suppose, someone has to be paid for sorting out the paperwork they could argue, and I am paying a £450 survey fee, also a £1400 'high loan to value fee' as its an 85% Mortgage, hmm still ok I guess, so all their costs are more than covered. Therefore, I am arguing that there is no way it will cost them almost 4k for me to stay with them, they cant possibly win a case saying thats the case, yes? BUT! If I write to them saying this they could I guess just agree to waive the fee but decline my new Mortgage (it is a self cert so they could say they were not happy with income for instance), then say it is a genuine redemption fee as we then have to go elswhere, and also as far as I can tell, but could be wrong, that might be hard to claim back as redemption fees are a bit of a grey area? I think I'm in a better position now, but think I need at least something in writing saying they are going to charge me a redemtion fee even if I stay. What do you think? In the meantime I really need to get my Mortgage sorted as the chain are getting antsy, we also want a quick move. Thanks a lot, and yes I do pledge a 5% donation.

Can anyone help please? I have read through here for the last two days but cant see a thread on this... I have a fixed rate mortgage with First National, there is a three month redemtion penalty, fair enough, but we are buying a new house and went back to FN for a new Mortgage. We are happy with the product so want to move it to the new property, topping up an additional amount as new house is more expensive. FN now say that we will have to pay a 3 month redemtion fee as the product is not 'portable'. Nowhere on the terms and conditions does it say this, they say Mortgages are against properties so by nature are redeemed when the property is sold, although some companies mortgages are 'portable' so this is down to the discretion of the company. It does say on our T&C they may waive this but so far have refused to do so, even though we have said we will go elswhere if they dont. (this has only been the word of people on the phone so far). We have also moved this same Mortgage once before when we moved here without penalty, so are confused as to why they won't do it again. If they insist on charging us the penalty (almost £4000) we will go elsewhere as we can get a slightly better rate, but I am worried that if we do that and then try and claim it back they can claim it as a genuine redemtion fee. I am thinking of writing to them, saying we have moved it once before so their claim of it not being portable is invalid, I am nervous of saying that I intend to claim it back at this point in case they simply decline our new Mortgage (there is no genuine reason they should). It is fixed for another 2 years and even the best rate available wont recoup that amount in that time. Surely this has got to be classed as an unfair charge? Can anyone tell me where to go for help please? Thanks.