Woolwich refusal to switch...

[JuCo]

Hi Guys, can anyone help me?

 

I've recently lost my job. I'm currently on a long fixed rated at 4%,with the Woolwich. The woolwich have a mortgage currently on offer at 2.8% which is exactly the same length as the term left on my original deal.

 

When I asked them if we could just switch the mortgage to the cheaper deal, which we could just about deal with on my partners income, they said they could swap-BUT my existing deal has a £7,000 exit fee, even if switching to one of their OWN mortgages!!!

 

Or they could send some things for me to consider-this basically extended the loan terms or made it interest only. This wouldn't help me out in the short to medium terms!!

 

Where do I stand, can they charge excessive fees for a very simple mortgage switch between the same companies products??

 

Thanks

[slick132]

Hi Juco,

 

There's a useful FOS guide here which you should read - http://www.financial-ombudsman.org.uk/publications/technical_notes/mortgages-early-repayment-charges.html

 

If I were you, I'd ask the W to show you exactly where, in your current mortgage terms and conditions, reference is made to the redemption fees. I'd also ask how they arrive at the figure of £7K.

 

When did you take out this mortgage.

 

It may be that you agreed to the early redemption fee if you took a fixed rate, a capped rate or a reduced interest rate mortgage.

 

In the Nineties and the Noughties, some banks were charging mortgage exit fees which exceeded their costs and these could be reclaimed. I think it was in 2007 that the FSA ruled that lenders had to limit the charges to reflect their actual admin costs associated with the ending of the loan.

 

In dealing with such matters, you need to differentiate between early redemption fees and mortgage exit admin fees or MEAF's.

 

The former may be fees that you agreed to when the loan was set up.

 

The latter should be the lenders reasonable fees associated with closing the loan. If the exit fees exceed what is reasonable, they may be penalties and, as such, reclaimable.

 

Edited September 7, 2013 by slick132

[JuCo]

Hi slick132,

 

Thanks for that. I'll have a look at the fos link.

 

The mortgage was taken out in 2007 on a fixed rate.

 

I will write to them regarding the points you have raised and see what happens...

 

Cheers

[slick132]

Noted and please come back with an update.