Phil and Alison V Northern Rock (ERC)

[phatram]

Help with Costs

I enclose a copy of your Offer of Loan dated 10 February 2003, Section 15 clearly states, if you move your mortgage from us within the first two years following the date of completion of the Loan then the Help With Costs benefit of £1000 must be repaid in full.

Northern Rock pic disagrees entirely with the suggestion the Help With Costs Clawback is unlawful and unenforceable. This charge applied to your mortgage account represents a core term of the contract you have with Northern Rock pic. It goes directly to the heart of the bargain between you and Northern Rock pic. It does not represent any form of damages for breach of contract and is simply the agreed charge for early redemption of your mortgage. You were clearly and unambiguously notified of the charge, as an express term, prior to entering into the mortgage agreement.

 

Surely what is said in the first paragraph makes it a penalty?

[zootscoot]

Penalty provisions only come into play where there is a breach of contract. This is the point Jamorgan lost her case on. Whilst it may still be possible to establish a breach of contract, the issue is not as straight forward as with bank charges. So the chances of losing are increased.

[phatram]

Did we breach the contract by moving mortgage? If so the £1000 is a penalty ?

[phatram]

bump

[phatram]

Does anyone know what this REALLY is ?

Especially want to hear from anyone who has a Northern Rock mortgage that was set up by Mortgage Matters.

[westwell]

I have a northern rock mortgage and the "help with costs" is a cashback deal on the mortgage but if redeem your mortgage early you are required to pay it back aswell as and ERC that may apply.

[phatram]

So then is it a penalty charge ?

[westwell]

I am not really sure but I wouldn't have thought it was a penalty as such.

[phatram]

Dear Mr and Mrs xxxxxxxx

Help with Costs Clawback and Discharge of Mortgage Fee (DOM)

Thank you for your letter dated 17 January 2007. Unfortunately, I can find no record of receiving your letter dated 2 January 2007, which is why it was not responded to.

As I understand it you are unhappy with the Help With Costs Clawback of £1000 and the Discharge of Mortgage Fee of £250, you paid when redeeming your account on 24 November 2004.

Help with Costs

I enclose a copy of your Offer of Loan dated 10 February 2003, Section 15 clearly states, if you move your mortgage from us within the first two years following the date of completion of the Loan then the Help With Costs benefit of £1000 must be repaid in full.

Northern Rock pic disagrees entirely with the suggestion the Help With Costs Clawback is unlawful and unenforceable. This charge applied to your mortgage account represents a core term of the contract you have with Northern Rock pic. It goes directly to the heart of the bargain between you and Northern Rock pic. It does not represent any form of damages for breach of contract and is simply the agreed charge for early redemption of your mortgage. You were clearly and unambiguously notified of the charge, as an express term, prior to entering into the mortgage agreement.

Discharge of Mortgage Fee

When you took out your original mortgage with us we provided you with a leaflet "Mortgage Costs in Black and White" - this is given to all our customers at the point of application for a Northern Rock mortgage and as such is standard procedure.

I am enclosing a copy of the leaflet from which you will see that the DOM Fee and the Despatch of Title Deeds Fee (now amalgamated and called the DOM fee) are clearly shown.

Since then we have provided regular notification, at least once each year, to show our latest fees and charges, particularly when we have made changes, by inclusion with your mortgage statements. These details have set out relevant fees at the level applicable at the time, including the DOM.

In addition your mortgage statements have made reference to the likely costs you will incur on redemption, and the DOM has specifically been clarified.

Our General Mortgage Conditions, by which you are bound, provide for our ability to make -and to increase - administration charges where applicable and a copy of this booklet was provided with your Offer of Loan.

Conclusion

In the circumstances there are no grounds upon which we can agree to refund the Help with Costs Clawback or the DOM Fee. We have been transparent in keeping you informed and therefore in disclosing the existence and the level of the fee in question.

That said, it is never our intention to be in dispute with our customers. When you took your mortgage out with us the Discharge of Mortgage Fee was £95 and the Despatch of Title Deeds Fee was £80 in total this is £175. As a gesture of goodwill I would like to offer you an ex gratia payment of £50. To accept my offer please sign and return the enclosed Acceptance Declaration using the envelope provided. It would be helpful if you could do so within the next 10 working days.

If however you feel unable to agree resolution because there are issues we have not fully addressed, please respond - preferably - in writing - setting out clearly your reasons and the additional information you would like us to consider.

I look forward to hearing from you and if you are unable to reply within the time-frame given above please let me know as soon as possible (my direct line is 0191 279 8003).

I enclose a copy of our Internal Complaints Procedure, which confirms how we handle complaints.

Yours sincerely

ta r&L •

Linda Christie Customer Support

Enclosure(s) Mortgage Costs in Black & White Acceptance Declaration Envelope

Internal Complaints Procedures Offer of Loan

----------------------------------------------------------------------------------------------------------------------------

Why would they offer us anything if they are right ?

[westwell]

They are offering you some money back from the "discharge of mortgage fee" because the FSA have intervened and say mortgage companies can't hike the cost up from what it was when you intially took the mortgage out.

A lot of people are getting some money back for this fee or otherwise known as exit fee/deeds fee.

 

I am not sure whether the "help with costs is technically a penalty" as its just a form of cashback mortgage.

[zootscoot]

Please ensure you read before proceeding:

 

 

http://www.consumeractiongroup.co.uk/forum/mortgage-companies/62003-important-mortgage-claimants-please.html

[phatram]

Hi

Has anyone had any success, or is in the process of claiming against Northern Rock, re. their "Help with costs Clawback" charge (£1000 in our case) and Discharge Of Mortgage Fee (£225) upon redemption of a mortgage?

Northern Rock have said that our initial offer stated "if you move your mortgage from us within the first 2 years following the date of completion of the loan then the Help With Costs benefir of £1000 must be repaid in full" and "it does not represent any form of damages for breach of contract and is simpy the agreed charge for early redemption of your mortgage" surely this is then a form of ERC?

Any advice greatfully accepted,

Thanks

Phatram

[PKea]

Hi Phatram, Have you looked at this thread

 

http://www.consumeractiongroup.co.uk/forum/mortgage-companies/62003-important-mortgage-claimants-please.html

[mattfromnotts]

You should be able to claim some of the £225 discharge fee after the FSA investigated the banks' inordinate increase in this area. If this amount differs from the fee quoted in your original paperwork when you took the mortgage out, you can reclaim the difference.

 

Matt

[phatram]

Read loads, still can't find out what HELP WITH COSTS is all about.

I don't understand any of the legal jargon in contracts, it may as well be in chinese!

[mattfromnotts]

I assume this is just their name for 'Early Redemption Fee'. What it implies is that there is a cost involved to them for you ending your mortgage early and this helps towards clawing it back, i.e. a standard ERC.

 

If you look at other threads you will see this is not easy to reclaim at the moment.

[mrsfoot]

Was you given help with your costs by them when you took the mortgage?