OT: Mortgages and hidden charges

[Tim Watts]

Worth a shot here - sure someone's got some recent mortgage experience.

I want to take out a small mortgage on the house I own outright - in order to finish renovations (the roof was unplanned and ate all my money).

RBS agreed on the phone (they are my main bank) and said: "No problem, it's small, we can do this. BTW there'll be a £30 CHAPS fee." Fair enough I thought.

So today (just read it, too late to ring the bank), I receieved pack from some people claiming to act as the banks solicitors say they want around £600 upfront for fees connected with Land Registry, funds transfer and random other things - plus some unspecified "variable" fees.

Nothing in the bank's own pack mentions this, through there may be an allusion to "other fees" in the tiny print.

It says in massive lettes "£30 CHAPS fee due" but nothing about "legal fees".

Is this normal these days? I do not recall paying the bank's legal fees last time I had a mortgage back in 1995. £600-800 is quite a sizeable fraction of the proposed loan.

Obviously I'm going to give them a roasting tomorrow, but I'd like to know if this is modern practise and whether I'll be wasting my time ringing other lenders.

Cheers

Tim

[Bill Taylor]

It's been standard practice for years. They would normally want a valuation and a charge has to be registered with the Land Registry, for which they would probably use a solicitor. Both are chargeable items. In 1995 they may have had a "no fee" special offer, or they were added to the mortgage and you didn't notice.

If it's a small loan you may be better off looking for another source of finance, interest free credit card maybe.

[Tim Watts]

On Tuesday 09 April 2013 18:16 Bill Taylor wrote in uk.d-i-y:

Hi Bill,

OK...

I assumed it was being merged into the mortgage one way or another (paid out of profits).

It annoys me because the bank's pack is very clear about highlighting a tiny fee and makes zero mention of any large fees.

The mortgae is small by mortgage standards, but still moderately large by load/CC levels. We decided that if we were going to go to that hassel, we might as well bump another lump on and get a conservatory built too.

I just spoke to HSBC and they claimed their mortgages did not require any fees as I already owned the home - and that land regsitry checks and valuation surveys would be covered by them.

The APR was a tiny fraction less than RBS too.

I'll give one of the building socs (an actual mutual) a ring next and see what gives.

[Jeremy Nicoll - news posts]

That doesn't make it clear to me what would happen if you failed to repay the mortgage. The whole point of the 'charge' or 'security' normally taken out is to give the lender the legal right, if all else fails, to reposess the house and sell it to recoup their money.

What will happen in your case?

[ARW]

So is this a house or a bungalow:-)? Sorry Tim - but you know what I am like.

Are you are under any obligation to continue with the the proposed mortgage?

uk.legal.moderated may be the best place to ask.

And good luck mate.

[Bert Coules]

Tim, was the company ITC Legal Services by any chance? If so, have nothing whatsoever to do with them: they're as shady as hell. They're well known for exactly this muscling-in practice in probate cases but I wouldn't be surprised if they were branching out into mortgages too.

There's a very interesting chat about them on the Money Saving Expert forum:

[Tim Watts]

On Tuesday 09 April 2013 19:19 Jeremy Nicoll - news posts wrote in uk.d-i-y:

That must be the case. But they were quite adamant that any legal checks and modifications would be at their expense. And all they need to do is check I have good title (it's on the Land Registry database, so that's easy) and check I have buildings insurance. And presumably have anote put on the LR record that they have an interest in the property.

I got SWMBO to recheck the Key Facts document from RBS and the Mortgage T&Cs. T&Cs say that legal fees should be mentioned in Section 8 of the Key Facts. They aren't - only the CHAPs fee is there.

She thinks they've cocked it up and told the solicitors that it's a normal conveyancing operation (ie I am buying from someone else) in which case items like "£290-odd for funds transfer" might make sense.

I shall ring them tomorrow. If it's not a mistake, I shall freeze the process and talk to other lenders...

*sigh*

Tim

[Tim Watts]

On Tuesday 09 April 2013 19:33 ARW wrote in uk.d-i-y:

Bungalow.

I don't think so. And if I were, it would be a good one for the banking regulator/ombudsman/whatever as a clear case of a hidden charge. And it will cost them 2 sets of salaries as I dump them for another bank I already have accounts with - so I do hold a reasonable set of cards. Not in any hurry - I could pull out of this and not be bothered...

I might try that depending on what RBS say... On the basis of "don't ascribe to malice what is probably due to incompetance"... Except we're talking about banks here.

[Tim Watts]

On Tuesday 09 April 2013 19:34 Bert Coules wrote in uk.d-i-y:

Fascinating - thanks...

No - it's "Optima Legal". I shall google for them...

[Dave Liquorice]

I think what you have said is correct and there has been a c*ck up. No surprise there you are dealing with a bank.

As you are going to have the money raised by this mortgage in your possession and not immediatly passing it to someone else have your thought about an offset mortgage? You bung the cash into a "savings" account linked to the mortgage account and you only pay interest on the

difference between the accounts (or no interest if the savings are >= the mortgage).

You don't earn interest on what is in the "savings" account but then you aren't paying interest on the mortgage... Mortgage rates are some what higher than the majority of savings rates. You may also be able to link

your current account(s) that probably aren't paying any interest at all

ATM as well.

[Tim Watts]

On Tuesday 09 April 2013 20:16 Dave Liquorice wrote in uk.d-i-y:

I hope so. Paperwork depresses me at the best of times - more so when it gets cocked up. I remembered I made a note of the arranger's email, so I just bunged off an email to her. It all seemed easier in 1995, even though I was actually buying an actual place.

I did ask them about that - they claimed that the mortgage funds were not able to be used like this. Not sure how or why, but they seemed sure of themselves - and I was speaking to someone in the UK, not India.

As one expenditure will have nearly half the loan, I was going to lob the other half in ISAs upto whatever the limit is. At least I'll get some interest.

Cheers,

Tim

[Dave Liquorice]

I'd get 'em to show me the written rules stating that. Maybe things have changed recently...

And have it clawed back and more by the interest on the mortgage. Carefu l portfolio selection of a Stocks and Shares rather than Cash ISA might turn a profit even taking into account the morgage interest. Watch for CGT but as the CGT Allowance is £10,600 I don't think that will be an

issue. Of course if this money isn't going to sit around long Cash ISA i s probably you best bet, except the amounts you can put into a Cash ISA ar e rather less than Stocks & Shares.

[F]

BACS is free and, in my recent experience, is OK for £100,000 or less and will get the funds to their destination within two hours.

[Tim Watts]

On Tuesday 09 April 2013 23:45 Dave Liquorice wrote in uk.d-i-y:

I dallied with shares once - never again. As I understand computers, I have an inverse understanding of the stock market - it's complete voodoo to me...

[Tim Watts]

On Wednesday 10 April 2013 00:00 F wrote in uk.d-i-y:

Good point - as we do not have a precise transaction window to honour.

But I'm not so cheap that I'm worried about £30. Twenty times that much though...

[Mark]

In that case a flexible mortgage looks a good option. I think they're still available and my current mortgage is one. You arrange to borrow the maximum amount you might need and then you only draw down the amount you need when you need it. Therefore you only pay interest on what you are currently borrowing.

Talk to the Nationwide.

[Dave Liquorice]

Thats the "Faster Payment" service which is, AFAIK, a different mechanisium to BACS.

Unless the banks have sorted things out *a lot* since Faster Payments came in to/from which accounts and how much you can shift is very variable. Not sure what "protection" there is either, say if there is a

typo in the sort code/account number.

[Dave Liquorice]

I didn't say shares I said portfolio in a Stocks & Shares ISA. Single company share dealing is risky and returns very variable and even more unpredictable. That's why you go for a portfolio of gilts, bonds, markets etc. Your investment is spread over a number of different investments, some relatively low risk but with stable returns, some higher risk but with higher returns. This sort of thing is normally called a "balanced" portfoilio.

You would really need to find an independant Financial Advisor though, who ought to assess your financial situation and your aversion to riaks and select a suitable portfolio of investments. They would also check that you have decent provision for the future, pension(s)/income and for the present, life insurance and/or permenant health insurance etc.

Though ISTR you are retired and comfortable but for others of working age, plan for the future now... No one told me why it would be a good idea to join the company pension scheme as soon as I could (18) rather than when I had to (at 21). I reckon those three years of missing contributions will cost me several thousand pounds/year on the (small) pension when I get it...

[Huge]

Doesn't answer your questions, though.

TescoBank/Natwest recently managed to lose £2.5K of my money during a transfer and were unhelpful and slow to do anything about it. I got it back after 6 weeks and £15 compensation. I'd close my account with them but I don't imagine any of the others are significantly better.

[Tim Watts]

On Wednesday 10 April 2013 10:36 Dave Liquorice wrote in uk.d-i-y:

Last point has always worried me. The name is not checked so it's all down to those numbers.

I always move a small amount after setting up a payee, and only a larger amount once the payee confirms the smaller amount worked.

Hideously weak system IMO.