mortgage query

[need2budget]

i have a quick question.

in 2005 i sold my house and bought a new house.

in july 05 i drew down my new mortgage with inbs.

a few days later in july 05 i paid off my old mortgage with inbs


inbs told me then i had to pay a penalty of 6mths interest as i broke a fixed term period when repaying the old mortgage..

as i took out my new mortgage with inbs they said that they would refund me 3 mths of this charge which they did back in 05..


my question is are they allowed to do this? i read in the news that inbs were refunding 6m in overcharging.....

is this unfair charging?

 

[ClubMan]

inbs told me then i had to pay a penalty of 6mths interest as i broke a fixed term period when repaying the old mortgage..

as i took out my new mortgage with inbs they said that they would refund me 3 mths of this charge which they did back in 05..

my question is are they allowed to do this?

I presume you mean are they allowed to charge a penalty as opposed to are they allowed to discount the penalty? A lender is allowed to charge an early redemption/breakage penalty on a fixed rate mortgage and this should be detailed in the terms and conditions of the loan agreement which you signed. Obviously you should check that the penalty was calculated correctly but there is nothing untoward about this per se.

 

[demoivre]

Fixed interest rate mortgages usually attract penalties if they are broken. It will have stated in the t & cs the exact nature and amount of that penalty.

 

[LDFerguson]

It would be popular practice among lenders to waive the fixed rate break penalty when a customer takes their new mortgage with the same lender - some insist that you "finish out" out your fixed rate period on your new mortgage. But there's no legal requirement on a lender to do this.

Liam D. Ferguson
www.ferga.com