5k charged for Right to Consolidate?

by Readers Question

9:33 AM, 3rd April 2019
About 3 months ago

5k charged for Right to Consolidate?

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5k charged for Right to Consolidate?

Hi all, I am in process of selling a BTL with Mortgage Express. When my solicitor asked for a redemption statement they wrote back saying below:

“We have the right to consolidate and take all monies. However, on this occasion we will just charge £5k which will be used across overall portfolio.”

I am now thinking of not selling. My question is has anyone else had this issue? My solicitor is about to write to say we will not sell it then.

Once they get this letter will they drop the £5k charge as they will lose the option to redeem this mortgage in full?

Many thanks

Rav



Comments

rav singh

15:09 PM, 3rd April 2019
About 3 months ago

Hi all

No not all with MX. I just wanted to know if anybody said they would now not sell and they then backed down on the amount they wanted in excess of the redemption.

No the £5k is not a charge it will be used to reduce debt on portfolio

rav singh

16:03 PM, 3rd April 2019
About 3 months ago

FYI after reading letter again it’s saying I am now being charged £20 a day interest so even if I decide not to sell they getting the money. I fact I’m now probably being forced to sell as it will cost me £7300 extra in next 12 months

Something to all bear in mind if you ask for a redemption on an MX mortgage

Dave Driver

16:23 PM, 3rd April 2019
About 3 months ago

How do they justify charging you extra interest?

Dylan Morris

22:33 PM, 3rd April 2019
About 3 months ago

Are you sure the £20 per day interest is not simply the daily interest rate charged on your mortgage ? So for example if you pay the mortgage off after the redemption date quoted, then it’s £20 a day interest thereafter. In other words just the daily interest you pay on your mortgage anyway. It’s normal for lenders to give you a redemption figure to the requested redemption date, followed by a daily interest rate your solictor can use to calculate the amount required to pay off your mortgage if the redemption is delayed beyond the quoted date.

Julie Kirby

7:10 AM, 8th April 2019
About 3 months ago

We have sold two properties recently with M.E. mortgages after first obtaining a letter from M.E. confirming they would not call in all the mortgages as a result of the sales. For one of them they just kept the extra proceeds of the sale and they chose which remaining mortgage to allocate the proceeds against based on their current valuations and the biggest LTV across our portfolio. For the other they required us to pay off another £2000 of our overall debt - which we paid initially to our solicitor's holding account. However the sale took 4 months and on completion of the sale our solicitor had different redemption figures from M.E. to those in their original letter to us. We both rang M.E. to check which figures to use and were told to use the new figures as their valuations change all the time. So their more recent valuation meant our portfolio LTV had improved and our solicitor refunded the £2000 which ME no longer required! One other point, on ME's redemption letter the daily interest charge listed is there to help calculate how much of the usual mortgage payment is owed for each day that the sale date extends past the assumed completion date. Hope this helps.

Colin McNulty

7:01 AM, 9th April 2019
About 3 months ago

Reply to the comment left by rav singh at 03/04/2019 - 16:03
As Dylan said, the £20 daily interest should just be your normal monthly interest (about £600 by any chance?) expressed as a daily figure.

Have you tried going back with a counter offer, e.g. £2,000?

rav singh

8:27 AM, 9th April 2019
About 3 months ago

Hi all. No I’m just worried about making any contact with them as I’ve heard such horror stories over the years.

Ian Narbeth

10:12 AM, 9th April 2019
About 3 months ago

Reply to the comment left by rav singh at 09/04/2019 - 08:27Rav
It is normal for a redemption statement to include a "daily rate". Your solicitor will ask for a statement calculated up to such and such a date. The lender will provide this: "You must repay £XXX with a daily rate of £y". All this means is that if completion is delayed by say two days the solicitor does not have to go back to the lender. He will know that the charge can be redeemed by paying £XXX + £2y.
From what you have said the additional £5000 will reduce your borrowings. Although you won't have the cash to spend it is not an additional charge. If you intended to sell I would sell. Furthermore, by selling you commence a pattern of dealing with MX which may be useful if next time they ask or redemption in full.
Sorry, Colin McNulty, I would NOT go back and propose £2000. You will just draw attention to yourself and it may backfire. There are horror stories about MX demanding full repayment. You have the chance to sell a property and redeem the charge on reasonable terms. Take it.

Colin McNulty

11:39 AM, 9th April 2019
About 3 months ago

Reply to the comment left by Ian Narbeth at 09/04/2019 - 10:12
Interesting comment Ian, is this what you're worried about:

Lender > "When you sell this property, from the proceeds we'd like to you to pay £5,000 off your other borrowings."
Borrower > "Oh I wasn't expecting that, would you accept £2,000 please?"
Lender > "Right! That's it! We're calling in all your mortgages!"

I'm being a little facetious of course. 🙂

The OP has already drawn attention to himself by opting to sell, MX has already looked at his situation and asked for a token £5k off his other borrowings. A dialogue is already underway and clearly they're not that concerned, otherwise they'd have asked for the lot.

I've had success negotiating with lenders initial demands and have on the whole found lenders to be quite reasonable and can be open to negotiation, of course providing the client is in good standing with the lender. If there are arrears or financial issues, it's a different ball game, but there's not suggestion of that here.

I guess at the end of the day, it comes down to how badly Rav needs that £5k.

Dave Driver

11:54 AM, 9th April 2019
About 3 months ago

Reply to the comment left by Colin McNulty at 09/04/2019 - 11:39
"I've had success negotiating with lenders initial demands and have on the whole found lenders to be quite reasonable"

Unfortunately there is plenty of evidence to show that MX, or what is left of it, is not a reasonable lender. They are quite happy to bring in LPA receivers for the smallest of misdemeanours, and have destroyed several investors already.

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