unfair mortgage ARREARS charges



Charitable community controlled law centre in Glasgow, UK.  Charity no: SCO 30193.   www.govanlc.com

step 1 - ask for a refund

step 2 - send a final letter

step 3 - raise a court action or complain to the Financial Ombudsman:
[England/Wales/Northern Ireland]

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Have you ever had mortgage arrears? 

If so your lender will have applied 'arrears fees' of £35 to £75 per month. Is this lawful?  Not if these fees are a penalty or 'unfair' charge.  This website tells you about UK law on unfair mortgage charges, how to reduce mortgage arrears and get your money refunded for free.

< Navigate the links to find out how to get a refund.

"A Govan Law Centre client family were subject to mortgage repossession.  The case was suspended in 2006 for payment of the monthly mortgage plus £60.  In late 2007, the lender sought to reactivate the case claiming only £10 had been paid to arrears each month. The family had paid £60.  The lender had been charging £50 'arrears fees' each month while the case was frozen."

What are 'arrears fees' for? Most lenders say they are for 'the extra costs incurred in supervising the account until arrears are paid or the matter is placed in the hands of solicitors'.   What supervision or administration takes place?  Some lenders say they have to telephone or write to the debtor, and instruct enforcement action. 

Some customers may receive a phone call and letter early on but not thereafter; and when a lender instructs a solicitor it charges a separate fee for this (in addition to the solicitor's own fees).  The difficulty lenders have is very little extra work appears to take place, and after the first couple of months of arrears there is generally no evidence of any extra work at all (except legal enforcement work which is charged separately under solicitors' fees). 

Yet lenders continue to levy 'default' charges indefinitely while homeowners are in mortgage arrears.  These charges are similar to bank or credit card default charges - which the Office of Fair Trading (OFT) has concluded are legally unfair in terms of the Unfair Terms in Consumer Contract Regulations.  In other words, a charge will not be fair if it exceeds the lenders actual administrative costs.

The legality of default charges has yet to be ruled on by a senior UK court but these will not be enforced if they are found to be 'penalty' or 'unfair' charges.  The law is clear on that.

the monthly charges of UK lenders





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