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To try to reclaim this fee?

(18 Posts)
Elemontary Thu 29-Dec-16 11:25:32

We repaid our mortgage 30 days early (from a 2 year term) because our buyer wanted to complete on a particular date or pull out of the purchase.
We were left with an £18,000 redemption fee on a mortgage to pay.

We did so because we were in a chain with the house we were buying and there were not any other options - other than to lose the house which we were not willing to do.

The redemption terms were £20,000 in the first year or £18,000 in the second year. Given we only left the lender 30 days out of their loan, could I argue that £18,000 was not in fact a true representation of their losses?

I am struggling to find any information on cases like this in RL or online - can anyone offer their help or experience?

Thank you

drinkingchanelno5 Thu 29-Dec-16 11:30:53

I don't think you've got any recourse. Early repayment is early repayment whether it's a month, a year or a couple of days.

harderandharder2breathe Thu 29-Dec-16 11:46:03

If it's in your terms and conditions then it's shit but that's what you agreed to

Heratnumber7 Thu 29-Dec-16 11:47:14

You could appeal to their better nature, but that's about it. Which lender is it?

Elemontary Thu 29-Dec-16 11:48:40

The lender is Birmingham Midshires. I read something on the Financial Ombudsman site about charges being 'reasonable', which I don't think this is (even though yes we signed and agreed to it)

govan Thu 29-Dec-16 11:52:33

Banks/lenders etc are under a lot of pressure at the moment to be fair with their charges. I think you should challenge this. Go in and talk to them, see what they say. Make a complaint to them about unfair charges if they aren't helpful - follow the official procedure. If that doesn't get you anywhere, take it further.

BarbaraofSeville Thu 29-Dec-16 11:54:36

Got to be worth a shot for that amount of money. See the financial ombudsman for info:

www.financial-ombudsman.org.uk/publications/technical_notes/mortgages-early-repayment-charges.html#3a

They say that early repayment charges should 'be a reasonable "pre-estimate" of the cost to the lender of the customer repaying early' so my argument would be based on calculating the difference in the amount of interest charged per month between whatever rate you were on and the lender's standard variable rate (usually around 4%) plus maybe a bit for admin and comparing it with the £18k.

I would guess that unless your mortgage is several millions (or tens of millions) then the interest difference for one month would be nowhere near that, so you should have a good case.

I hope your new mortgage doesn't include such ridiculous charges? What was the benefit to you when taking out such a contract? Is your mortgage several million £££s and did you have a spectacularly cheap interest rate? £20k or £18k seems so out of proportion with what is reasonable.

Elemontary Thu 29-Dec-16 12:03:15

The mortgage was just over 500 - it was a % of the total borrowing. Is that particularly out of proportion? I had assumed it was the norm.

BlackSwan79 Thu 29-Dec-16 12:04:41

It's not about being fair it's about actual costs to the bank. Early repayment fees will be set based on the contract the bank has entered into in order to lend you the money. When they offer a tranche of mortgages at a set rate they will enter into a contract elsewhere to fund that lending so by you surrendering early they will have costs to settle elsewhere

RedastheRose Thu 29-Dec-16 12:12:01

Did you take out a new mortgage with them for the new house? Usually lenders will waive these fees if you take a new mortgage within a certain time period! If not then it sounds like something that should have been highlighted to you by bank when you told them you were selling and buying a new house so you could have made the decision as to which lender was best to go with for new mortgage. If you knew about it then it really was up to you to make the enquiries before you found yourself in this position tbh. Probably worth writing a letter asking if they would reconsider the charges due to circumstances and definitely if you have taken new mortgage out with them.

Elemontary Thu 29-Dec-16 12:13:38

We took out our new mortgage with a diff lender as the previous one didn't offer what we needed.

BarbaraofSeville Thu 29-Dec-16 12:19:16

500 = £500k mortgage?

So £20k is about 4% or a year's interest? I don't know what is the norm as I've never had a mortgage with early repayment charges as they just seem to be hugely in the bank's favour, but it just doesn't seem reasonable at all to be stuck with such a huge penalty if your circumstances change.

Elemontary Thu 29-Dec-16 12:42:45

I've never had a mortgage without an ERC (!) but then this is the first time we'v had to repay early and have been affected by it ...

I have just pulled out the paperwork and am going to attempt an email to the bank. It wasn't BM at all actually - it was Clydesdale!

Mrsmorton Thu 29-Dec-16 12:56:09

Totally worth trying, you've nothing to lose and it does seem an unreasonable amount although as you said, it was in your contract. £18k for 30 days..!

AreWeThereYet000 Thu 29-Dec-16 14:08:33

That sounds about right to be honest, I work with the mortgage department of a well known company and our ERCs depending on what product you selected is between 2 and 4% although the company I work for does waive this if you are within 90 days of your deal ending or moving the mortgage to the new home with you. We would still charge the ERC if you was 91 days away from deal as our policy is 90 days so I think unfortunately that if your mortgage provider has an ERC if you cancel at any point before your deal ends you're just going to have to pay it and learn from your mistake (or look for better terms on any new borrowing) xx

DollyPlastic Thu 29-Dec-16 14:11:09

God that's a lot of money.

I would have refused to move until it suited us tbh, but if I were you I would try and reclaim some of it.

Good luck, it does seem like a massive amount for less than a month.

Elemontary Thu 29-Dec-16 14:32:53

Thanks Arewethereyet. I have just sent my email to the lender (Clydesdale) and we were 34 days from the end of the term.

If only they had a 90 day waiver! Can I ask which bank has the waiver and is this a usual clause for lenders in your experience?

CheeseFiend36 Thu 29-Dec-16 15:44:28

You should have passed the £18,000 to the buyer on the basis that he/she was insisting you complete on a certain date. it sounds like he/she got the deal to work in his favour as perhaps they avoided a problem in their own chain by forcing you to sell early? Appreciate it would have been hard to insist they pay it though.

I work for a bldng society and all I would suggest is asking them to waive it as a gesture of goodwill. Mention the circumstances that you were given little choice. Legally they are not obliged to consider your request but may be feeling sympathetic.

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