Mortgage risk charge fee.

[rfisher]

Many years ago I had a mortgage with Northern Rock.

I've been looking through some old documentation and noticed that they charged me several £1000's risk charge fee during the arrangement of that mortgage.

Although it has been a long time, in the light of what we now know about the (hopefully past) behaviour of financial institutions, I'm starting to feel a bit unhappy about this fee.

Are such fees still in use?

Is it worth taking my unhappiness up with NR, or will they just tell me to feck off?

[Sarnie]

rfisher said:

Many years ago I had a mortgage with Northern Rock.

I've been looking through some old documentation and noticed that they charged me several £1000's risk charge fee during the arrangement of that mortgage.

Although it has been a long time, in the light of what we now know about the (hopefully past) behaviour of financial institutions, I'm starting to feel a bit unhappy about this fee.

Are such fees still in use?

Is it worth taking my unhappiness up with NR, or will they just tell me to feck off?

Why are you now unhappy with this fee?

I'm assuming it was a MIG (Mortgage Indemnity Guarantee) or a HLC (Higher Lender Charge). These were only ever charged if you were taking out a high LTV product. Your money purchase an insurance policy that protected the lender if they had to repossess the property and there was a shortfall.

If it's on all of your documentation, next to your signatures, then I can't see any reason why they would entertain a complaint.

[rfisher]

Thanks Sarnie.

Are these still in use?

[Sarnie]

Only by very small regional Building Society's really, none of the high street lenders utilise them any more....

[westberks]

Sarnie said:

Only by very small regional Building Society's really, none of the high street lenders utilise them any more....

not a nice insurance but served a purpose at the time; like most things, it's when they weren't explained that was the problem and all of a sudden there is an extra couple of grand stuck on a mortgage offer that hadn't been mentioned.

helped to get lending at higher loan to value and let lenders offset some of the risk.

[nosuchuser]

FA I was talking to the other day said they still exist for ltv > 80% but are hidden in the interest rate.

Could be talking ste but it's his line of work

[Sarnie]

nosuchuser said:

FA I was talking to the other day said they still exist for ltv > 80% but are hidden in the interest rate.

Could be talking ste but it's his line of work

He's sounds paranoid

[westberks]

Sarnie said:

nosuchuser said:

FA I was talking to the other day said they still exist for ltv > 80% but are hidden in the interest rate.

Could be talking ste but it's his line of work

He's sounds paranoid

and is talking ste

[Maryben]

nosuchuser said:

FA I was talking to the other day said they still exist for ltv > 80% but are hidden in the interest rate.

Could be talking ste but it's his line of work

With interest rates at 90% LTV nearly double what they are at 60% LTV with some lenders, in a roundabout way they are building in a risk fee. The higher the LTV, the higher the risk therefore the higher the interest rate.

[Sarnie]

Maryben said:

With interest rates at 90% LTV nearly double what they are at 60% LTV with some lenders, in a roundabout way they are building in a risk fee. The higher the LTV, the higher the risk therefore the higher the interest rate.

Naturally the higher the LTV, the higher the risk, the higher the interest rate. But what the poster was alluding to was that this FA was claiming that lenders were actually still charging for MIG's but just by including them in a higher interest rate.

Which of course is utter rubbish.