Early Repayment Charges

[IS IT ME?]

Hi join the club, many many people have paid these charges and I think just think I've found a way of geting them back, its all in the sales document which some one has looked at and I'm away there reply.

 

when I have it it goes on here!

[seelybee]

Thanks for the interest. I'm still contesting the Financial Ombudsman's provisional decision against me at the moment citing the unfair contract/penalty aspects etc, based on Supersleuth's invaluable advice. I really don't want to give up even if it takes me another year, so any ideas that anyone has will be very gratefully received, especially if I have to take this to court.

[Guest suziedarkness]

subbing with great interest

 

suzie

[henderson50]

Does anyone have any suggestions for the following problem.

 

I bought a property using a buy to let mortgage from Bank of Scotland. The mortgage was only needed for a few months whilst some improvements were undertaken and the tennant would be moving. I took over the tennant with the purchase, they were moving abroad so suited us all.

 

My mortgage broker sourced the product using 'MORTGAGE BRAIN' an online subscriber sourcing site which claims to have or had support fro the Lenders as well as brokers.

 

It was critical there was no ERC because of the short term arrangement I had on purchase.

 

Product sourced and an online approval was given with Bank of Scotland. No ERC applicable to the product. All went ahead, came to remoprtgage 9 months later, Bof S charged 19k ERC. They claimed their product was wrongly presented on the Sourcing website.

Ombusman would'nt help due to BUY TO LET mortgage not being protected by FSA.

Finally got some help form conveyancing solicitor and mortgage broker who have stumped up 11k for their mistakes of not spoting the difference between the offer and the online approval-product same codes etc.

B of S just don't want to know saying the Mortgage Brain is not their responsibility-this seems unreasonable as the Brain procvides a mortgage promise, selling their schemes.

 

Any comments would be welcome

Thanks for your time.

[Billy55]

Having read this thread I note that Supersleauth is of the view that an ERC is potentially an unenforceable term in a mortgage contract, this is a view I share, and was wondering whether anyone has a transript of the first instance decision in the Cherry Tree case? I note that in the CA case the Defendant tried to challenge the original decision on the basis that it was not a consumer contract and therefore outside the scope of the UTCR etc. I wonder why they did not challenge the fact that it was an unfair term/ penalty clause and why the CA doesn't appear to have given any obiter comments on this point, unless of course it was considered a given fact that if it was a consumer contract then it was a penalty clause/ unfair term..Any thoughts?

 

I would particularly like to hear from Supersleuth - have you had some success?

[iconoclash]

Hi - found this template letter from another cagger - might be useful??

 

 

Request for repayment of early redemption charge and Mortgage discharge fee

 

Dear Sir/Madam

 

Account Number: XXXXXX

I am writing to request a refund of the early redemption charge of £xxx and a discharge of mortgage fee of £xxx which were debited to my account when I redeemed my mortgage on 29/03/2006. I now understand that these charges are in all likelihood disproportionate to the costs that you actually incurred. As such, these penalties are unlawful at Common Law, Statute and recent consumer regulations. 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 these charges are proportionate to the costs you have incurred 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 represents an unfair term of contract which is contrary to the Unfair Terms in Consumer Contracts Regulations 1999 (SL. 1999/2083). Your charges 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 will now give you 14 days to reply to me accepting, unconditionally, my request in principle and letting me know a date by which I will receive payment.

 

If you do not respond, or if you do not respond positively, within this time period, I shall send you a Letter Before Action giving you a further 14 days in which to reflect. While I would like to settle this matter amicably and without the need for court action and the attendant publicity this will receive, you can take this letter as 28 days notice of my intention to issue a claim should you not comply with my request. I believe that these targets are more than sufficient for a large company such as yours with dedicated staff and departments.

 

Yours faithfully,

 

 

XXXXXXX (Mr)

Last edited by stig1953; 12th January 2007 at 13:46.

[henderson50]

Campari2

 

Thanks for that,its in the post tonight.

 

Just for info guys, applied for bank charges to be refunded on May 8th 2009 circa £5000 under the Hardship rules to Barclays.

 

Yesterday June 26 2009 receieved payment of £4400. Get going anyone who fits the criteria

 

Relieved Henderson50

[Billy55]

Henderson 50 if you are going to make a claim for repayment of an ERC worth £19500 you are going to come up against substantial opposition. If you have to issue proceedings, then the claim won't be governed by the small claims track rules, therfore if you lose you are extremely likely to have to pay the Defendant's costs in Defending the action, clearly these could be substantial.

[henderson50]

Billy55Thank you for your note of caution the ERC is £12k, does the same the same apply.RegardsHenderson50

[enoughisenough]

I don't know how many of you caggers are aware of the Treasury Selct Committees call for submissions from anyone with an interest in sub-prime mortgages. I have been running a campaign for about a week now to try and get as many of us to flood the TSC. Here's a link to the thread which sets out how the submissions need to be made. Apologies for Hijacking the ERC thread but if this can be flagged up before the TSC it's just yet more evidence of their gross unlawful conduct.

 

http://www.consumeractiongroup.co.uk/forum/mortgages-secured-loans/205401-sub-prime-mortgages-call.html

[Dustymunchkin]

Somewhat different but still Abbey and still incompetent.

 

April 2008 my daughter bought her first flat - Mortgage via Abbey. 2 yr. fixed rate 6.74% ERC. In December 2008, with house prices plummetting she decided to move into a bigger flat in same building.

Time was of the essence. She'd been given 8 weeks by the vendors. Abbey promised her that as an existing mortgage holder, it would be straightforward and take a couple of weeks.

Originally the idea was to port the mortgage but Abbey said she couldn't because she was in negative equity and would have to repay the £15k neg equity and pay 30% deposit on the new flat. She'd paid 3.5k on flat one.(Old flat cost 65k sold for 50k New one 60k) So, far from being portable she had to find 32k to borrow 40k. I own my own house so I offered to remortgage.

She could have kept the old rates but with new mortgage rates at 3%, paying the ERC seemed OK.

Time dragged on. The vendors were patient but with no mortgage approved by April....(5 months down the line on an existing no default borrower) the adviser at Abbey told her he'd never encountered such a ridiculous delay and personally advised she go elsewhere. She was lucky as I could increase my borrowing and we got her moved in within the week.

She's independant and I've only just realised she was charged £2742.00 for this fiasco. Presumably £1800 ERC and 5% deposit perhaps creating some kind of cash advance. She hasn't had a costs breakdown as it went through her solicitors and the statement just says:

Abbey £ 63,792.33

Should she be cross? I mean they reneged on the portable mortgage. (that may be how it works when you're in negative equity) and the idea of the ERC is surely that you're on a preferential rate for 2 years so that costs them. She wasn't. She was paying more than anyone else. (I spose they could say they were losing her inflated charges but doubt it) Ultimately, she was forced to go elsewhere because of their incompetence. I'm sure that was genuine.

It cost her a further £1,000 because if she'd gone elsewhere 5 months earlier, her interest repayments would have been £200 a month less.

It was such a relief not to lose the flat at the time but now I'm thinking Abbey treated her incredibly badly and then charged her £2700,00.

Surely a mortgage should be portable under the same rules as the original. (i.e. 5% deposit) It seems to me that they breached the contract to a greater extent than she did and while it was to her advantage to pay the ERC and get a lower interest rate, the only reason for doing that through Abbey was her 'existing customer' status and their promise to sort it within two weeks. Can anyone offer any insight or suggest if this is worth pursuing?

[Mephistopheles]

Hi - the way I read it NO - if you re-read Supersleuths Post no. 7 above that covers it I think.

 

 

Probably not but read your terms and conditions, ERC's are charged because of set up costs by lenders, the earlier point from supersleuth hits it on the head, 'if its part of the package been sold' then you could find yourself with a hefty court bill if you lose and believe me all lenders will protect this and fight it otherwise mortgages are too cheap. It comes down to the time you've had the mortgage and rate you got it at, hang over ERC's ie you had a cheap rate but the ERC locks you in for a longer period than the cheap rate are where you are likely to be more successful

 

Wider impact, if it ever becomes precedent, either app fees will rocket or rates will rise substantially.

[Dustymunchkin]

Thanks! I think you're right in that all those charges were in her contract terms and were therefore valid but...were they right to say the mortgage wasn't portable?

The original intention was to transfer the existing mortgage on the existing rate to the new property. From their documentation that should be portable.

I can see that the value of the new property at £5k less might pose a problem but at that point we didn't know it's value. (and it was still worth 10k more than the property she had)

 

Where redemption of the existing mortgage and purchase of the new property is not simultaneous, providing the purchase of the new property completes within three months of the redemption date, the existing product can be ported to the new mortgage and any early repayment charge will be refunded, as long as the customer takes the previous product for the full amount to their new mortgage.

On redemption of the existing mortgage the early repayment charge is paid in full and a refund will be made on completion of the new purchase, as long as the product is ported. If the new mortgage is less than the existing mortgage, the early repayment charge refund will be a proportionate amount.

Any additional borrowing must come from the new business mortgage product range.

 

There's nothing in this about 'if we don't do that deal any more because there's a recession on' In fact, the last line suggests that the presence of a new product range will not affect existing loans. So, my argument is not so much against the ERC etc. but about the fact they said she couldn't transfer the existing mortgage. (because they'd increased deposit req'd on new-build from 5% to 30%)

Had they agreed to that, I would have loaned her the price difference. She would have stayed with abbey for another 12 months on her fixed rate. There would have been no delays and no incurred charges.

 

She would not have chosen to redeem if she could have ported the mortgage. If Abbey have the option to refuse to port based on economic climate then I have no argument.

 

I think my next move is to go through the really really small print

[Mephistopheles]

Thanks! I think you're right in that all those charges were in her contract terms and were therefore valid but...were they right to say the mortgage wasn't portable?

The original intention was to transfer the existing mortgage on the existing rate to the new property. From their documentation that should be portable.

I can see that the value of the new property at £5k less might pose a problem but at that point we didn't know it's value. (and it was still worth 10k more than the property she had)

 

Where redemption of the existing mortgage and purchase of the new property is not simultaneous, providing the purchase of the new property completes within three months of the redemption date, the existing product can be ported to the new mortgage and any early repayment charge will be refunded, as long as the customer takes the previous product for the full amount to their new mortgage.

On redemption of the existing mortgage the early repayment charge is paid in full and a refund will be made on completion of the new purchase, as long as the product is ported. If the new mortgage is less than the existing mortgage, the early repayment charge refund will be a proportionate amount.

Any additional borrowing must come from the new business mortgage product range.

 

There's nothing in this about 'if we don't do that deal any more because there's a recession on' In fact, the last line suggests that the presence of a new product range will not affect existing loans. So, my argument is not so much against the ERC etc. but about the fact they said she couldn't transfer the existing mortgage. (because they'd increased deposit req'd on new-build from 5% to 30%)

Had they agreed to that, I would have loaned her the price difference. She would have stayed with abbey for another 12 months on her fixed rate. There would have been no delays and no incurred charges.

 

She would not have chosen to redeem if she could have ported the mortgage. If Abbey have the option to refuse to port based on economic climate then I have no argument.

 

I think my next move is to go through the really really small print

 

 

Ah right, I can definitely steer you on this one as my company has the same policy.

 

Yes the mortgage is portable but its subject to status, and I think if you look closely you will find a line that says subject to current lending criteria. That means, they are obligated to port the rate, but only if you fit with regards to their current lending criteria. If that means 30% deposit, well, thats what it means to port the rate. I would suggest an argument to them about how you are a valued customer and you wouldn't want to take the business elsewhere and as them if their product department is prepared to take a view.

 

Meph

[Dustymunchkin]

they are obligated to port the rate, but only if you fit with regards to their current lending criteria. If that means 30% deposit, well, thats what it means to port the rate.

 

Am I being a bit dense here? In effect, that is exactly what she was doing. Coincidentally the 15k price difference I was loaning her when combined with the 3.5k already deposited would have been equal to a 30% deposit and kept the loan amount the same.

 

However, based on your input, the penny may have dropped.....

My logic says his argument revolved around the negative equity.

If the loan remained static at £61,500 and the deposit was £18,500. effectively they were loaning her £1,500 more than the property value. Could that be it? Can a loan be higher than house value? (obviously it can if values go down) but on this new arrangement I'm beginning to see how relevant the new property value may have been.

My view was Abbey were getting £10k more security from the new flat. Logically, Abbey benefitted. Would I be right in saying that's not part of the equasion?

 

Abbey definately said she couldn't port the mortgage and they knew I was lending her the shortfall so, contract wise, it wasn't a failure to meet the revised deposit requirements but it could have been a failure of the property to meet the required security for the loan.

 

I am truly grateful to you for your input. She's bringing the contract round tomorrow and you've seriously clarified what I'm looking for and how to interpret it.

 

I think my overview of a portable mortgage was wrong. I thought of it as a loan with the security transferred from one property to another. You refer to the rate.

That would make a big difference. I guess one that is only relevant when property prices take a dive. I'll go away now and think that one through but I'm pretty sure I've applied logic where none exists.

 

Thank You Kind Sir. Your advice is invaluable.

[Billy55]

Hensderson 50 the fast track starts at £5K therefore my previou point would still apply

[Mephistopheles]

they are obligated to port the rate, but only if you fit with regards to their current lending criteria. If that means 30% deposit, well, thats what it means to port the rate.

 

Am I being a bit dense here? In effect, that is exactly what she was doing. Coincidentally the 15k price difference I was loaning her when combined with the 3.5k already deposited would have been equal to a 30% deposit and kept the loan amount the same.

 

However, based on your input, the penny may have dropped.....

My logic says his argument revolved around the negative equity.

If the loan remained static at £61,500 and the deposit was £18,500. effectively they were loaning her £1,500 more than the property value. Could that be it? Can a loan be higher than house value? (obviously it can if values go down) but on this new arrangement I'm beginning to see how relevant the new property value may have been.

My view was Abbey were getting £10k more security from the new flat. Logically, Abbey benefitted. Would I be right in saying that's not part of the equasion?

 

Abbey definately said she couldn't port the mortgage and they knew I was lending her the shortfall so, contract wise, it wasn't a failure to meet the revised deposit requirements but it could have been a failure of the property to meet the required security for the loan.

 

I am truly grateful to you for your input. She's bringing the contract round tomorrow and you've seriously clarified what I'm looking for and how to interpret it.

 

I think my overview of a portable mortgage was wrong. I thought of it as a loan with the security transferred from one property to another. You refer to the rate.

That would make a big difference. I guess one that is only relevant when property prices take a dive. I'll go away now and think that one through but I'm pretty sure I've applied logic where none exists.

 

Thank You Kind Sir. Your advice is invaluable.

 

 

Hi Dusty,

 

let me clarify a little more.

 

If the existing lending is £61.5k and you need 30% equity for them to agree, then the property value has to behigher for the LTV (that's loan to value) to be 70% or less.

Looking at the figures you've quoted it suggest the loan amount is £61.5 and the property value is £80k, £61.5 + £18.5k depsoit, this makes the LTV 76.875.

 

When Abbey did the original lending they will have priced the rate at whatever the LTV was that she took out, again on your figures, that sounds like £61.5k on £70k almost 87.8% LTV. Now it sounds like whats happened is you have offered a better proposition to Abbey from a security viewpoint, but they won't port the rate over although its a better situation for them because the pricing is wrong from an LTV standpoint.

 

Now that sounds stupid as the exposure is higher at present, please confirm the figures, but if not and its the other way round ie the LTV will be higher on the new house, thats why they will have said no.

 

Meph

[gee_gee]

Campari2

 

Thanks for that,its in the post tonight.

 

Just for info guys, applied for bank charges to be refunded on May 8th 2009 circa £5000 under the Hardship rules to Barclays.

 

Yesterday June 26 2009 receieved payment of £4400. Get going anyone who fits the criteria

 

Relieved Henderson50

 

Henderson50,

 

Was wondering if you have a copy of the template you used and what other supporting documents you sent to Barclays to get your hardship loan approved. Just been reading other threads and it seems very few people have been successful with this. Any help you can give would be good. I'm currently facing repossession, unemployed, paying my creditors token payments (£1.00) so any extra cash i can get my hands on would help a lot.

 

Thanks

 

oops - sorry for hijacking the thread

[wolboy]

Please read post below.

Computer went funny and submitted two posts.

Edited November 23, 2009 by wolboy
Duplicate post

[wolboy]

Hi People

 

Was looking for some expert suggestions as I am new to all this Mortgage Jargon to be honest.

My girlfriend currently has a mortgage with abbey and has just sold her flat within the two year erc time frame and has just got a bill for £3456.

Now this is fair enough to a degree but we have just signed a joint mortgage with Abbey again for a bigger mortgage all at the same time.

On there site and i will add the link at the bottom it states if you take out another mortgage or port your old mortgage these fee's will be exempt!!

I have just written to abbey asking about this but have heard nothing as yet but just seem's excessive paying them 3k when we have just got another mortgage for 100k more than the last one, Any help would be appreciated.

 

Regards

Wayne

 

Legal Information : Mortgages : Abbey

[jaybp7]

We had a morgage with Gmac that had redemption penalty for three years. They sold our morgage on to Derbyshire home loans. We did not get a new contract, neither did we sign one. Ater two years we had to sell the property incurring one years penalty which we were aware of. This was going to be deducted from the price of the sale. However Derbyshire Home Loans also deducted an extra ERC that we had no idea about. Having to pay two charges i feel was completely unfair and would like to claim back. Do i have a case. Jay.