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Monday, November 29, 2021

‘Halifax took my final mortgage payment too soon, then charged me £1,000’

Dear Sally,

I was in the happy position to pay off my 10-year mortgage with Halifax five years early and so arranged to make the final payment and settle the balance on Sept 1. The statement I received said I owed a total of £54,793 with no early repayment charge due.

Knowing I was going to be away in the days leading up to Sept 1, I visited the Halifax branch in Taunton on Aug 26 and explained that I wanted to make sure there were adequate funds in my account on that date. The Halifax cashier and I looked at the statement together and confirmed the total amount to pay, for which I wrote a cheque as requested. He congratulated me on being mortgage-free for the first time in 50 years.

On Sept 6 Halifax sent me a letter stating I had a separate administration fee to pay. This was irritating and I thought it rather unjustified.

Two days later Halifax sent a letter thanking me for repaying my mortgage. But it went on to demand £1,047 as an “early repayment” charge.

I was stunned and made a complaint but there was no change. I appealed, but again, no change. I spoke to the complaints manager, who reiterated the early repayment story. I wrote an email of complaint to the chief executive but got no reply. Please help.

WS, Taunton

Sally says:

You must have felt exhilarated when you penned that final cheque to Halifax, knowing that you could finally shake off your mortgage millstone after half a century of making monthly repayments.

But it seems exhilaration quickly turned to fury when that large bill came in the post representing an early redemption charge. These fees usually apply to fixed-rate loans if repaid early and can range from 1pc to 5pc.

You understood that mistakes happened, but when you pointed out the obvious error over the date the cheque had been credited, you were flabbergasted that Halifax refused to see it as such and still demanded that the fee be paid. When you took your complaint as high as the bank’s chief executive – who failed to respond to your plea – you felt compelled to ask for my help.

I requested that Halifax investigate what had gone wrong and make amends.

I am pleased to say it did not take long for its team to own up to the blunder in your case. It turned out that your payment had mistakenly been applied the very day you handed over your cheque, rather than five days later, as you had so carefully planned and agreed with staff at the branch.

After my intervention, Halifax arranged to withdraw the demand for the redemption charge. A spokesman said: “We are sorry, we got this wrong and should have fixed it sooner. We have apologised to the customer and let him know we’re putting it right – removing the fee and closing his mortgage as requested. We are also making a payment of £200 as a gesture of goodwill for his inconvenience.”

I suspect most homebuyers, from almost the minute they take out their home loan, dream of the day when they are mortgage-free, like you.

Once upon a time, people would say to those in a position to pay off their mortgage in full, earlier than expected, that they would be wise to keep a small balance on their mortgage. One explanation for this was so the mortgage lender would keep hold of the title deeds of the property, making it straightforward for owners to find them. However, these days the Land Registry holds these deeds in electronic form instead, so proof of ownership can usually be obtained easily when needed.

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