waived erc's

[hesanmp]

i had a mortgage with a high street lender. on a fixed rate with high erc.

 

 

looked to sell property and port to new house.

 

 

lender agreed to wave erc.

(new house was not completed on same day as old house).

 

 

new mortgage offer did not include any erc's etc but did insist old mortgage was fully redeemed.

 

 

interest rate was same as old fixed rate mortgage but

 

 

the new mortgage offer gave no details for period of loan.

 

 

one year into the new mortgage and the rate was changed as per the mortgage conditions on the old house.

 

 

the rate was too high so i opted for a new fixed rate and got hit with a 6% erc which was over 30k!!!

 

 

the erc was also based on the new mortgage sum which was 50k more than the old mortgage

 

my question is

 

 

'if the old mortgage was redeemed in full and the erc waived,

 

 

how can the new mortgage attract an erc

and have the same conditions as the 1st mortgage?

[Conniff]

If you waltz into your bank with a fistful of pounds you just won on the lottery and paid off your mortgage, then that is an early repayment which attracts a charge. If you are paying off a mortgage with another loan, that is not the same and the lender will not be losing interest.

[hesanmp]

in essence i had won the lottery, i had sold a property and paid off the mortgage in full. the new purchase originally was due to be a simultaneous transaction bu the new purchase was delayed. the lender did not charge the erc on redemption of the mortgage. the new loan was drawn down 2 months later.

[Conniff]

I'm not really understanding. Why shouldn't a new mortgage have an erc attached ?

[hesanmp]

sorry my mistake. the old mortgage had an erc attached. when i applied for a new mortgage it was on the basis that the old mortgage was to be ported. the lender therefore agreed to wave the erc. i assume the understanding was the new mortgage would be taken out at the same time as the redemption of the first mortgage. therefore the erc would not be paid but would be a condition of the new mortgage. the new mortgage offer made no reference to the original mortgage and made no reference to an erc!

[hesanmp]

Default Re: waived erc's

sorry my mistake. the old mortgageicon had an erc attached. when i applied for a new mortgageicon it was on the basis that the old mortgage was to be ported. the lender therefore agreed to wave the erc. i assume the understanding was the new mortgage would be taken out at the same time as the redemption of the first mortgage. therefore the erc would not be paid but would be a condition of the new mortgage. the new mortgage offer made no reference to the original mortgage and made no reference to an erc!

[hesanmp]

just found out erc was waived in full on redemption of 1st mortgage. new mortgage offer was a stand alone offer with not a single reference to old redeemed mortgage. offer was accepted, draw down of funds, registration with land registration completed. it now transpires 2 months later the lender sent out a revised mortgage offer with all the original conditions which were attached to the redeemed mortgage. surely unless the new loan was redeemed again in full, and a new loan opened, then the revised offer would not be legally binding and the earlier accepted offer would stand?

 

if that is the case, i have been charged in accordance with the conditions imposed by the earlier mortgage!!

 

what should i do, i am ten's of thousands out of pocket!!!!!???

[hesanmp]

hi conniff - if you're still out there???

 

just had a copy of my solicitor's file and it seems we did accept the banks offer which was silent on the previous mortgage (which was redeemed in full). the new offer of loan specified a low rate of interest for a term of 25 years. there are no conditions re early repayment charges and furthermore there is no reference to any interest rates coming to an end and therefore reverting to their variable rate.

 

my situation is therefore: original mortgage was a fixed rate product with erc's etc. i sold the property and redeemed the mortgage in full. the erc was waived. i applied for a new mortgage for a new purchase. the bank agreed and sent me a new offer of loan which was accepted and the funds drawn down. despite the banks error they decided to apply the conditions of the old loan i.e. stop the fixed rate when the original fixed rate period expired, charge me a full new erc on the balance when i went onto a new fixed rate.

 

surely the bank has to abide by the new loan conditions? it has no legal basis to rely on the old mortgage conditions?

 

i look forward to your comments.....

[Conniff]

As far as I can see hesanmp you took out a loan and agreed to the terms of that loan. You then paid off that loan and the bank agreed to forego any erc, so it and any of it's terms are now dead, they don't exist any longer.

 

 

You applied for a new loan with the same bank, and it was granted, the terms and conditions of this second loan must have been agreed by a signature of yours and the banks. Unless there is a specific clause saying we can alter the terms of this agreement without notice or consultation, then they can't. They would have great difficulty even if it did say that as they would invoke the 'Unfair terms in consumer contract' regulations, which state that a term is unfair if it has been taken unilaterally.

 

 

It would be worth you having a read through this - http://www.legislation.gov.uk/uksi/1999/2083/contents/made -

 

 

Where this might fall over is the timing of the second loan, was it at the time you paid off the first one and that being the reason the erc was not charged. Was there any implied verbal agreement or could they have been led to believe that this was continuation ie a remortgage. Has the word 'remortgage' be used at all? I can't see that it would as a remortgage would be a second loan on a property with an existing loan on it.

 

 

Is there any chance you can put up the new mortgage agreement, (with all personal identity removed), so I and others may see exactly what they are asking you to agree to?

If you can, do it in .pdf or it will be too small to read. There's good instruction here if you need help - http://www.consumeractiongroup.co.uk/forum/showthread.php?431533-How-to-upload-documents-images-on-cag-immediately-you-do-not-need-10-posts

[hesanmp]

hi conniff

 

when i was redeeming my existing mortgage it was a common understanding that my intention was to port the old mortgage or rather its terms onto the new property i was purchasing. at the time the new offer of loan came out it almost coincided with the redemption of the old loan. when the new offer came out i informed the bank it was wrong i.e. it stated 2.99% (for example) for 25 years and not for the remainder of the original fixed rate period. the banks head office was informed but they choose to do nothing about it. it has subsequently transpired that as this was a high mortgage sum the redemption issue and the subsequent new offer of loan would have had human input and checked by a manager. in their subsequent internal notes senior managers are asking their departments 'why has this happened, the new offer should have incorporated the old conditions, why wasn't the erc charged and then claimed back when the new loan was taken, within 3 months etc etc'

 

with respect to your 4th paragraph a remortgage can only apply when you continue to reside in the same property. this case involves the full redemption of the old mortgage (which i add was a condition of the new loan offer) and the drawing down of a new loan, ON A NEW SECURITY.

 

i will now have a look of loading the offer of loan.

 

ps. following the shambles involving the offer of loan, and my acceptance, the bank subsequently issued further loans (months after drawdown) and this time included the various conditions from the original loan!

[hesanmp]

hi conniff

 

for some reason i am not permitted to add attachments, don't know why???

[hesanmp]

hi conniff

 

any idea how i can upload the offer of loan?

 

cheers