‘Barclays charged me £30.00 to cancel a mortgage I never signed up for’

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Dear Katie,

Last year, my wife and I wanted to transfer our property, so my mortgage broker requested a rate from our then lender, Barclays. We ended up finding a better price elsewhere and decided to go with that. So imagine my surprise when Barclays said I had to pay an early repayment penalty of £30,000. This is because it claims I started the new mortgage which was close to £1million and then canceled it after just a few days.

I am absolutely furious, because I have not done such a thing. At no time did I sign a new mortgage contract and I had no direct relationship with the bank. I was shocked when I received an offer letter saying that I did not need to take any further action and that the mortgage would start automatically.

This is definitely not what we asked for. We asked for a rate that we could compare to other deals in the market so we could make a decision on what was best for us.

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I have made many phone calls and numerous letters and emails to Barclays, but it has not been able to provide any documentation to show that I have signed a mortgage offer. So how on earth can it maintain that I’m liable for these early repayment charges?

A payment of almost £5,000 has just been debited from my account for this mortgage. This has been going on for over a year which is completely ridiculous. Nothing I say seems to make any difference.

– CW, via email

Dear reader,

Prepayment charges are designed by banks to protect the income stream they earn from the interest that borrowers pay. Such penalties should discourage borrowers from signing up for fixed deals and then changing their mind mid-term. This is just business.

But obviously here, where you never intended to let the mortgage go through in the first place, an early repayment was completely inappropriate.

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For starters, after you signed on the dotted line with another lender, you had no idea this Barclays mortgage was even getting set up. You hire a broker to handle your mortgage business and he had booked this Barclays rate before your old two-year deal expired. It was only meant as a throwback while he searched for better deals for you. This is standard in the world of mortgage brokerage.

After you initially booked this Barclays deal for you, your broker found you a lower rate with another lender. You started working on this and were given an end date on which you expected your loan to be transferred. This date would be the same day your previous Barclays mortgage ended, which is a Friday.

Unfortunately, due to delays in the administration, the new mortgage did not go through on time and was only set up on Monday. This meant that the Barclays fallback mortgage went through automatically and because it was a remortgage rather than a new one, no signature was required.

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Rather than recognize this situation for what it was, which was an administrative blunder, Barclays decided to treat you as a customer who had deliberately left a firm deal prematurely. To me, this attitude is clearly ridiculous.

Fortunately, after my involvement, the early repayment charges have been scrapped and the £5,000 you had to pay has been refunded. Why it took a year, and the involvement of this column, to make this happen is beyond me.

A spokesperson for Barclays said: “We are very sorry that Mr and Mrs W have had cause to complain. We can confirm that the early repayment charges have been removed and that we will refund the monthly repayments we have received.

“The mortgage rate has been changed in response to an instruction from their independent mortgage broker, which we now understand was made incorrectly. We would like to apologize for the distress and inconvenience caused.”

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