I have a mortgage on my home in London with NatWest, on a five-year fixed rate. I want to renovate and need to remortgage in order to fund this.
I know I will have to pay an early repayment charge for leaving the deal early, but I have secured a lower interest rate on the new loan which will save some money.
I also want to make two overpayments, equating to 10 per cent of the balance each, on the existing loan before I remortgage. Reducing the balance should just about make the sums add up.
My mortgage terms say I am able to overpay by 10 per cent of the balance every year without penalty.
This reader wants to remortgage to fund renovations – but has been hit with a penalty charge [stock image]
The date given on my mortgage offer as the year-end is 31 December.
I made one 10 per cent repayment in mid-December 2021, and another in January 2022 – so they would be counted in years one and two of the mortgage respectively.
This, I thought, would allow me to avoid the early repayment charge of 4 per cent of the mortgage balance, or £3,890.
However, Natwest has notified me that I must pay that charge. It says that any repayments in year one of my mortgage needed to be made by 30 November, or they would count as being paid in year two of my mortgage.
Do I really owe them this money? It says clearly in my documents from when I took out the mortgage that the ‘on or before’ date for making overpayments in each mortgage year is 31 December. P.A, London.
Helen Crane, This is Money, replies: Renovating a home is often described as one of life’s most stressful experiences and this mortgage mix-up has hardly eased the burden for you.
Mortgage start and end dates can often be a source of confusion.
When taking out a new mortgage, some borrowers will be offered a fixed term based on a certain amount of months from the date that their mortgage started.
When browsing mortgages, these will be advertised as ‘fixed for 24 months’ for example.
Other home loans, meanwhile, will set a certain date in the future that the term will be fixed until – even if that does not equate exactly to the mortgage’s fixed term.
These deals will be advertised as being ‘fixed until 03/02/2024’ for example.
The difference will only be a matter of a few days or weeks, but it does mean that the first year of your mortgage will, in real terms, be longer than that, and your repayments adjusted accordingly.
This may have been the problem in your case. Though your mortgage may have started earlier, the first year did not end until 31 December – as stated in your mortgage offer.
A mortgage offer is a legally binding document, meaning the year-end dates given there should be correct.
You even took the sensible step of double-checking this end date before making the overpayments.
You say you spoke to NatWest advisers on the phone on two occasions, and that one of them told you that you had until 31 December to pay.
While you could have made the payments by 30 November if necessary, you believed you had until 31 December so decided to hold off – only to be hit with the unexpected charge.
When you queried this with NatWest, you were told by a customer service representative that they checked the tape recording of one of the calls and that there was no mention of the 10 per cent being paid off or the 31 December date.
But you believe this happened on the other call you made, which you believe was not checked at that time.
You will soon need to access the equity from your remortgage to pay for the renovations to be started, so you reluctantly paid the £3,900 charge in order to avoid any delays.
This reader was hit with the confusing early repayment charge after making two 10% overpayments, in order to reduce his balance ahead of remortgaging his home
I contacted NatWest to ask them about the charge.
It checked the details of your mortgage account and found that you did indeed have until 31 December to make any overpayments, and still have them counted as being in year one of your mortgage.
It says it will now deduct the £3,890 charge from your mortgage balance.
A representative for NatWest said: ‘We apologise for the inconvenience caused to the customer and have now offered a refund’.
You have told me that you are pleased with this outcome, and with the speed with which NatWest corrected the error.
This will enable you to remortgage and start remodelling your home.
However, a less eagle-eyed borrower might have missed a charge such as this among the other sums which were coming in and out of your mortgage account at this time.
It serves as a lesson to check your mortgage documents carefully when making any changes, as even big banks make mistakes and errors can occur.
I hope you can now get on with your renovation project, without having to worry about any more rogue charges.
Reader Ken wasn’t happy with his spectacles from Glasses Direct, which started falling apart just after the two-year warranty ended. But an email to the chief executive got it fixed [stock image]
Hit and miss: This week’s naughty and nice list
Every week, I look at the companies who have fallen short when it comes to customer service, and those who have gone above and beyond.
Miss (but then hit…): Reader Ken got in touch with a problem relating to some spectacles he bought from Glasses Direct.
He bought them in 2019, and frustratingly, the frames became warped and the lenses kept dropping out – just after the end of the two-year guarantee period.
‘I put up with this for a while but when it got to the point when it became embarrassing I decided to return them saying that they were obviously faulty,’ he said.
Glasses Direct posted the glasses back to him, with a note saying they could not be repaired as the warranty had expired. The note said a discount code had been emailed to him to order another pair – but no email was ever received.
Ken then decided to email Glasses Direct’s chief executive, Barney Streeting.
The next day, he received an email from their customer services apologising for the way the return had been handled, and saying that this was not the level of service that was usually provided.
He was asked to choose a new frame and has now received his new glasses, free of charge.
While he shouldn’t have had to go to the company’s chief executive to get this sorted, Glasses Direct had clear vision in the end – and it shows the value of complaining to the very top.
Golf caddy manufacturer, Motocaddy, offered a speedy replacement to reader Les [stock image]
Hit: On a brighter note, reader Les wrote in to tell us about his positive experience with Motocaddy, which makes trolleys for golf clubs.
He said: ‘I would like to highlight the Motocaddy company. I bought a new golf bag last April and was very happy until one day in November one of the pocket zips seemed to have completely come apart.
‘I dropped into the golf shop I bought it from on the Sunday. The salesperson took pictures and sent them off to Motocaddy.
‘On the following day, he asked me to send the code number from inside the bag which I did.
‘On the next Thursday, I received a call saying my new bag was waiting to be collected. Sunday to Thursday, a new bag. Fantastic service.’
I’m glad you weren’t left tee-d off.
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