Mortgage Early Redemption Penalties

[GraemeC]

Guy, from what I've read, even if you consider the redemption penalty as buying yourself out of the deal, this is probably unfair under UTCC as the contract was not individually negotiated and therefore any costs for a service have to be 'reasonable'

 

For this reason, I cant see the banks using this as a defence. Again from the OFT site (full link http://www.oft.gov.uk/News/Press+releases/1999/PN+43c-99.htm )

 

A redemption charge may be regarded as a penalty even if it is expressd as the as the price for exercising a right rather than a consequence of breaking the agreement

[norvernrob]

I am remortgaging and am just about to be hit for an early redemption penalty of £3700, so I can't wait to see the replies to these claims.

 

I don't bank or have any business with the mortgage company either so I will have nothing to lose!

 

Good luck to everyone who has started this off, I hope by the time my new mortgage is complete there will be some more info to act upon!

 

edit: I have just had a look at the mortgage paperwork. I had a 2 year discounted rate which finished in April, so I am now paying the lenders standard rate. However the early redemption penalty is for 3 years so doesn't finish until next april.

 

Mortgage was discounted by 1.7% for 2 years, rising to the standard rate in april this year.

 

This is the Early repayment statement.

 

Current balance £63,193.38

Early repayment + deeds release charge - £190

Early repayment charge @ 6% of the mortgage - £3791.58

Interest - £451.82

 

Early repayment figure - £68,150.22.

[surreyscouse]

Update on my claim for ERC's, full post in the Abbey forum

 

Ok, called Lord Burns office, letter sent 15th May, received 16th and logged on 18th. Has been passed to stage 2 complaints whatever that means and an aknowledgement will be with me in 5 - 7 days.

 

Ok, so just faxed over my LBA with 14 day deadline so will see what response that gets.

 

The lady i spoke to did not seem to unfazed by my comments. Maybe she didn't have a clue what I was on about though

[norvernrob]

Good stuff SS, keep us updated and good luck!

[Seminole]

I am watching this with extreme interest!

[joneshousehold]

Hmm, yes me too!

[surreyscouse]

me too !............ oh sorry, this is my claim ! Doh !

[jmc5571]

This is good stuff. I'm up for the call. Have just paid Halifax £3180 plus £100 administration fee. This was redeemed at the end of year one of a two year fixed rate mortgage (4.99%). Any clues on how that equates working by previous calculations. Halifax really creamed me! - Current Account, Credit Card and Mortgage!!!

[Nightmare4banks]

Hi all!

 

jmc5571,in order to assist you further,please provide the following information:

 

1.Amount borrowed.

 

2.Rate of interest after the expiry of the fixed term period - refer to your mortgage agreement.This is called The Standard Variable Rate.

 

3.Length of the tie in period with the Halifax.

 

4.After how long did you redeem the mortgage? - Please be specific i.e with the exact dates.

 

Upon receipt of the information,I will be in a position to do the calculations for you.

[jmc5571]

Hi Nightmare4banks.

Amount borrowed £318,000 (yikes)

Fixed Rate 4.99%

Standard variable 6.5%

Two years for fixed

First year 2% penalty

Second year 1% penalty (left at 12 months one day)

[Nightmare4banks]

Hi all!

 

jmc5571,after going through the figures you have given me it seems you would not be entitled to receive any refund.

 

Actually you are still in a better position than somebody who still has his/her/their mortgage with Halifax.

 

To be honest with you,this is a bit strange because every redemption amount

I have worked out so far has been a loss for the customer.

 

Please double check your figures and update me.

 

However,if the figures are correct this could potentially also open the floodgate doors for the folks that have existing mortgages that have had the redemption period expire to claim to be penalised by the mortgage company in comparision to a person(s) whose mortgage account(s) has/have already been redeemed.

 

Perhaps some mortgage companies have decided to this with more recent mortgage products (say going back no more than 2 years) to potentially avoid paying back customers redemption penalty monies but may have not covered their a**es for dealing with their existing customers.

 

So,

 

1.I would be interested in any input on the legal aspects of this sort of scenario.

 

2.I would suggest at looking at different types of mortgage products of various mortgage companies over the last several years by members of this forum posting brief details regarding their mortgages.

 

I am prepared to carry out all the calculations and to conclude if there is any specific pattern with the trends in the mortgage products.

 

Just a thought for all to consider!

[katesage]

Hi all

 

Anyone legally minded enough to offer an opinion on how i tackle a redemption penalty that i paid on a joint owned Portman mortgage with violent and psychotic ex!!

I would like to try and get some of the 9k back that we paid to get out of the mortgage about 10months before it ended. 3yr fixed rate deal.

Do I just claim back 50% which i'd be more than happy to do as it keeps me below the 5k small claims,

Also V importantly, he MUST not know my current whereabouts so if I start writing letters in demanding a partial refund could he do a DPA access request and be shown my correspondence letters complete with my current address.

Bit of a nightmare!?

 

I've drafted a letter along the lines of the one on this thread but i'm tempted to take it into the local branch to see whether they can guarantee my privacy and safety! I'd rather be safe than get any money back obviously.

 

thoughts appreciated

 

k:rolleyes:

[joneshousehold]

Not sure if this should really be in a separate thread and I can only reply on the confidentiality question. Your information is confidential and if any details are given to your ex there would be a contravention of the regulations. It doesn't matter that the account was joint.

 

That said, errors have been made and I would be inclined to go in anyway and insist that a very big note is made on the records. It still can't guarantee that they won't make a mistake although it may reduce the risk and it does mean that you can make them carry the can if they do.

 

I know this doesn't help you an awful lot, but I want you to realise that all banks, building societies etc are only as good as the staff they employ and they do pay them peanuts at times so realistically there is no guarantee.

 

The bottom line is that the regulations say you have an assurance but in truth you are still vulnerable if perhaps only to a small degree.

 

Hope that helps!

[katesage]

Thanks v much

 

I think your right to think that I am protected in principle but not in terms of human error. Thats the sticky bit!

This should be a separate thread, sorry to hijack! The Q about former joint accounts and who gets the refunded cash merits a new thread. When I find out more I'll start one. Cheers

 

Kate:)

[Nightmare4banks]

Hi all!

 

katesage,I am very sorry to read about your violent and psycotic ex.Any guy who hits a woman is not a man.

 

I also had a looney tune ex girlfriend!

 

Anyway,I would suggest as follows:

 

1.Go to the nearest branch of the Portman and give them proof of your current address etc.However,use a mailing address possibly not in your area for your own safety(give this address to the portman and the court) to have all the papers regarding your claim sent to you at the mailing address.The costs involved should be fairly reasonable and you could either collect your post or have it forwarded to your home address.

 

2.Because you had a joint mortgage,you may have to claim together and split the amount on 50/50 basis but because you are no longer together i.e. two small claims could be made in each of your seperate names.

 

3.The second option would be to hire the services of your solicitor who dealt with the house transactions(or a solicitor that you know who has experience in domestic violence i.e.this way the solicitor would have to contact your ex and get his signature on the summons and possible a legal document drafted to say that you allow your ex to keep 50% of the claim and visa versa.This way your ex will not need to know your address just pay the solicitor to use his/her address and dealing with the paperwork.If attending court is needed and you are worried about attending court with your ex being possibly around suggest that it is better for the solicitor to represent you and he/she can issue you each with a cheque after the Portman hopefully coughs up less his/her fees.If and when you hire a solicitor,make sure to get any fee agreement in writing from him/her so there are no possible future disputes.

 

In order to do the calculation for you,please provide the following information:

 

a.Amount borrowed.

 

b.Initial Rate of Interest i.e. in your case please quote the fixed rate.

 

c.Rate of Interest after the expiry of the fixed term - This is called the Standard Variable Rate - refer to your mortgage agreement.

 

d.Length of the tie in with The Portman.

 

Upon receipt of the above information,I will in a position to do the calculation for you.

 

I hope you find the information/suggestions useful.

 

If you have any questions or need more help,just ask.

 

Keep us posted.

 

All the best!

[katesage]

hey thanks for that:)

 

I will go to the branch but to be honest if they tell me that i can only make the claim jointly with him (even with solicitor) then i would not proceed at all. £4000 is not worth any sort of contact! it was as bad as that!

i guess i will find out if i can make any sort of claim on my own, if i can i'll start a thread and let you know

its not all bad i've had to pay ERPs on BOS and Natwest in the last 6 yrs also (on my own!) it was just the portman was the biggy!! i'll go after them instead if i can!

BTW the idea about using a mailing address is genius, that would protect me from any potential future DPA requests he may make.

 

thanx again

k

[Nightmare4banks]

Hi all!

 

katesage,I would suggest you go to the Portman and update us.

 

Then we will consider all the options.

 

Regarding your other mortgage accounts,just post the info. I have listed in the previous post together with the initial rate/s i.e.fixed or discounted etc.

 

Upon receipt of the information,I will be able to do the calculations for you.

 

Yes,the idea of a mailing address is very good - although I say it myself because

I have used one in the past.You can also use other services i.e.phone calls,forwarding of post and collection of post.Most of these sort of arrangements are also flexible - you will probably be charged less if you pay for say 3 months rather than only 1 month.The calls and post forwarding would be extra.Make sure to get a written list of terms and conditions which you have signed so there are no potential future disputes.

 

I hope you find this information/suggestions useful.

 

If you have any questions or need more help,just ask.

 

Keep us posted.

 

All the best!

[rbrears]

There's a post on the general forum called "My Mortgage Fees Were Refunded" by carriexs87 which is worth a read

[Nightmare4banks]

Hi all!

 

rbrears,I have read through the post but it does not tell me any figures apart from the £4,800.If I had all the figures I would in a better position to be able to work out how the final figure/redemption penalty refund was reached.

[thecornflake]

No they didn't. Do not confuse 'not making as much profit' with 'making a loss'. The two things are completely different. Common law only lets you recover 'liquidated losses', that's what this entire forum is founded on. The only way they can justify any redemption penalty is if that sum is the actual cost to them of ending your particular mortgage early. In other words, they would have to be able to point to specific expenditure which they had to make in order to end your mortgage, and that is what the penalty is there to recover.

 

Does this mean that loss of profit is not counted as a loos in this instance? I'm getting confused now - In theory the only actual expenditure they have is a bit of paperwork??? This would only add up to a few quid at most.

[Robertxc]

Does this mean that loss of profit is not counted as a loos in this instance? I'm getting confused now - In theory the only actual expenditure they have is a bit of paperwork??? This would only add up to a few quid at most.

That's about the size of it.

[ellielou]

Hi there

 

I have just paid Kensington Mortgages £5,600 ERC - I think I'll be sending them the letter earlier in this thread to see if they can show just how this charge is calculated. Surely if that isn't the amount of their liquidated losses then the ERC is also a penalty???

 

Or am I just making this too simple. I don't have any legal training so to me it really does seem that simple?

 

Has anyone had any joy with this yet?

[norvernrob]

Surely if that isn't the amount of their liquidated losses then the ERC is also a penalty???

 

Or am I just making this too simple. I don't have any legal training so to me it really does seem that simple?

 

Has anyone had any joy with this yet?

 

I think that's the $64,000 question at the moment! Opinion seems to be split but i'll certainly be giving it a try, i've just paid almost £4,000 ERC as well.

[SJKChamberlain]

Hello all, I am about to be charged an ERP of 6months interest on an interest only loan with a 3 year initial tie in period with Mortgage Express. I took out the mortgage on an investment flat Nov 2004 and asked my broker for one without penalties (I can't prove that though) and then trusted him and obviously didn't read the small print. Anyway, Due to change in circumstances I am selling up and moving country. Therefore the almost £3,000 they intend to charge me is quite a blow.

 

I will bring you the figures tomorrow based on an approximate completion date on the proposed redemption statement they have already sent me - would you be able to work out for me whether or not I should contiue with a claim? Thanks heaps

[SML]

Hello all. This is my first posting. This looks like a fascinating forum. I own a largish portfolio of properties which I had intended holding onto for many years. Due to unforeseen circumstances, I had to put some of them up for sale and I have now been made an attractive offer. I re-mortgaged most of these properties quite recently and they all have incredibly punitive ERPs which last until 2009. For example, one mortgage for around £214,000 has an ERP in excess of £10,000. Ridiculous. Most of these are with the same lender. I thought I was stuffed and would have to pay these, but, reading this string, it seems I may have a case. I used to be a lawyer but left the law 20 years ago so can't offer much in the way of legal input. But many of you seem expert in this and I'd very much appreciate some help and advice as to how to go about making my case. Many thanks.