How To Begin Your Claim For Mortgage Exit Fees
In part two of our guide to reclaiming mortgage fees, we tell you the first two steps to making your claim. We also talk more about how much you should claim, and mention some early successes.
Just last week I wrote part one of this guide, yet I have already received some emails about it, and some people have posted on our Reclaim Unfair Mortgage Fees discussion board.The news is encouraging. Most people have said that a simple call to the lender has resulted in a full refund of the exit fee, minus what the fee was back when the mortgage was taken out. On at least one occasion, the claimant received interest on top. Some claimants have also managed to get a complete refund of their whole exit fee, which is what I'm arguing that you should go for.So it seems that, for many or most of you, a quick call will do it. However, I know that many Fools won't be happy with a partial settlement, and some others are likely to be greeted with greater resistance from their lenders.Furthermore, as one Fool, a former industry insider, pointed out to me, if you've applied to your mortgage lender for additional loans, you could be hit by an exit fee for every loan you've applied for! This could mean that the costs will stack up significantly, and it'll make the thought of pursuing a claim further more attractive.Still undecided about whether to claim it all, or just part of it?This old article from the BBC might help you make your decision: Some mortgage exit fees 'illegal'. Two thirds of the way down that article you'll see that you can listen to a clip from BBC Radio 4's Money Box. You should take the time to listen to that six-and-a-half minute clip. Mostly it focuses on whether the practice of ramping up exit fees is unfair. However, as I argued in my first article, it touches on whether even the original charge was unlawfully high.It gets particularly interesting at the end of the Money Box clip, where the talk turns to clear and fair contract terms. Your contract must make a very clear statement as to what the charge is for. Lenders make it clear that the fee is for administration costs, which means that the fee should reflect their administration costs. That charge must be fair. If it is unfair, then it is a penalty which is unlawful.Notice that, at the end of the Money Box clip, the industry insider says that these fees can't be penalties, because penalties aren't allowed. This terrible argument will sound familiar to the thousands of claimants who have successfully recovered their bank charges! (See The Ultimate Guide To Reclaiming Bank And Card Charges.)Furthermore, I mentioned in part one that a lawyer I know is taking her lender to court for the whole mortgage fee. To update you, she said that her lender did not submit a defence within the time allowed, so she is applying for a default judgment against it.She also had this to say:"If your readers have a clause that says admin charges, or reasonable admin charges, are payable on repayment then they should go for the whole refund, on the grounds that the amount that they have been asked to pay is unreasonable. If the original contract does not state the amount of a charge or if the mortgagor was given a separate piece of paper which stated the current amount of the charge, then the judge could decide what is reasonable and order that to be paid."However, if they have been told that they have to pay, say, £130 and this goes up over the course of the term to £175, rather than going for a refund of £45, I would be inclined to argue that a charge of £130 is excessive and therefore an unfair clause, which would be struck out in its entirety if the judge agreed. The judge would not have discretion to substitute a lower amount if a fixed sum has been stated. It is a case of all or nothing."Hopefully you're now ready to claim, so here's how to go about it:Stage oneThe phone call. As I said, a simple call might do it. Say that the exit fee is unfair and ask for the whole lot back. The lender might make an offer, so it's up to you whether you accept or take it further.Stage twoLetter time. It's really not much different from the bank charges letter, as its based on the same principles. Here's my template letter:---Dear Sir/MadamAccount no: (your mortgage account number)You have charged me a fee for exiting my mortgage that you claim is to cover your costs for closing the account. The fee is far too high to possibly reflect your true administrative costs. It is unlawful at common law, and under statute and consumer regulations, to impose charges in standard, pre-written contracts without making it clear what the charges are for. Furthermore, the charges must be fair, not penalties.Unless you can prove that these charges are a fair reflection of your administrative costs, I require full repayment of these charges, which I calculate at £xxxx.If you do not comply fully within 14 days, I shall begin a claim against you for the full amount, plus interest and costs.Yours faithfully(Sign your name)---I think that's enough information for now. In parts three and four of this guide I shall include a template for a follow-up letter and I'll explain how to take court action.Next article: Get Tough On Mortgage Exit Fees.> Read The Complete Guide To Reclaiming Mortgage Fees.> Compare mortgages through The Fool.