Alliance & Leicester's £295 mortgage termination fee

Hence a practice of some lenders of lying and overstating the ammount owing by several hundred quid to ensure it is all paid off then sending you a check for the overpayment. You willneed to be good at maths and memorising interest rates to prove them wrong.

That actually seems like a good idea. :)

That may have worked with A&L but other mortgage providers may have penalties for overpayments of more than 10% of the remaining value in any one year.

How can they do that?

They overstate the ammount owing, very clever bods.

You mean it's an estimate and therefore legally speking not a lie? :)

"Biscit" wrote

I would assume one can do this only with a mortgage which is fully flexible as to lump sum repayment.

This is because the lender is free to regard the cheque (£14 short of a full redemption, even assuming they forget the £295 termination charge) as merely a capital repayment, leaving the mortgage intact.

It comes down to whether you need the lender off the Land Registry record for your house. The extra legal fees involved if/when you next move house will be more than £14 and they they have you by the goolies. They will ask for £14+£295 or else.

Luckily I have no plans to move.

A simpler method is to just pay them the full redemption amount but not pay the £295. That leaves a mortgage of zero.

Nationwide recently introduced a fee, but only if you pay off a mortgage with more than 10 years to run. I asked them about this and they advised leaving 1 outstanding and they'd charge no interest.

The advantages of retaining the mortgage with a trivial balance is that they look after the deeds for free, and if you ever need to borrow any money in the future it should be simple to get a low rate loan by borrowing back on the mortgage.

Also in the case of Nationwide as long as you leave 100 owing it maintains your membership which let you take out member only products, and your right to a windfall in the unlikely event they convert.

and a disadvantage is that they charge a hefty fee every time you, or someone else, needs to refer to them or reterieve them

An update:

Unfortunately it hasn't worked so far.

I have just phoned them to see what's happened to their interest on the land registry, the deeds, etc.

They claim to have received an instruction from me (totally bogus) wanting the account to be re-opened. So they have re-opened it, refunded an amount direct to my bank calculated to create a £500 outstanding balance on the account (their minimum mortgage, apparently), and left it like that!!!!

They also left the November monthly payment at the old amount, so they will collect the whole lot "by accident" next month.

Absolute bastards, and all done without any communication.

I told them to check their tape recordings of the alleged phone conversations.

Evidently Alliance & Leicester staff are well trained to handle people who don't want to pay the £295 termination charge...

In the meantime, I am going to leave the mortgage at £500, with a ~ £3 monthly repayment :)

Let's say I want to sell the house. Roughly how much extra will the legal bill be if there is a mortgage outstanding?

Andy Pandy wrote

I left £1 outstanding, in return for which they look after the deeds for free, but the condition they set out was that I had to insure through them. This only became a problem when a new company bought out the Chief Rent on my property and are now insisting that I take their 'recommended insurance', but I have started a new thread on that subject. It upsets a long-standing arrangement. :-(

OMDB!