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    • The Architect
    • By The Architect 11th Oct 16, 4:40 PM
    • 6Posts
    • 1Thanks
    The Architect
    ERC Charges - Where do I stand?
    • #1
    • 11th Oct 16, 4:40 PM
    ERC Charges - Where do I stand? 11th Oct 16 at 4:40 PM
    Hello all,

    Just to provide a bit of context here:

    I started the process of selling my property to a friend a year ago, I knew there would be 4% of the remaining balance to pay as I would still be within my 4 year fixed rate product period which ends on the 30th of November 2016, I was fine with this as I was moving abroad and could live with the penalty as having the funds would be rather useful.

    Due to slow work from the buyer and their solicitor it has taken many months and we are now at the point where I can avoid the 4% penalty by completing in the last month of my fixed rate product period (anytime from the 1st of November onwards) which makes a great deal of sense having come this far.

    On the 23rd of September I asked my solicitor if we could complete on the 3rd of November (the updated redemption figure takes 2 days...) and they then replied with the following:

    'The buyers Solicitor has advised us that their client’s mortgage offer expires at the end of October. They have agreed to draw down their mortgage funds at this time but wait to complete after 1st November to ensure that you do not have to pay your early redemption fee.'

    They asked me to provide proof that Nationwide will let me avoid paying the 4% penalty in the last month of the product period which I did and all was fine until today. I've had no contact with my solicitor since September and was contacted by the buyer today advising that as the offer expires on the 29th of October it must be completed by that date. Since then the buyer has looked into various avenues to try and save me 4% of the remaining balance for the sake of 48~ hours and has found the following:
    • The lender will not allow the funds to be drawn down and then completed any longer than 24 hours after doing so.
    • The lender will no extend the mortgage offer at all due to a rate change.
    • The buyer's solicitor never confirmed they could draw down the mortgage funds then complete a few days later.

    As far as I can see there is no way for me to avoid paying 4% of my remaining balance only 48 hours before I could have avoided this despite waiting just over a year for a FTB to purchase the property which is incredibly frustrating.

    Is there any point in picking this up with my solicitor? They advised me the proposed plan was fine and that the buyers solicitor had confirmed this with them, due to this I left my job to become a student a week later, if I'd have been given the correct information I would certainly not have done this. I admit leaving work before completion was in hindsight a bit silly but am annoyed that incorrect information led me to make an important decision.

    Here are my questions:
    • Is my solicitor in the wrong?
    • What happens if they've told me something incorrect?
    • Does the fact that if they'd given me the correct information I'd still be in the same situation play a part? - AKA Can I receive any compensation for leaving my job based on incorrect information?
    • Any ideas on how to get around the 4% penalty?

    Sorry if any of the above is too vague or there's too much rubbish and not enough information, I will provide anything I can to help people answer so please say if this is required. Thank you in advance for all answers/help provided.
Page 1
    • Lokolo
    • By Lokolo 11th Oct 16, 4:44 PM
    • 19,561 Posts
    • 14,508 Thanks
    Lokolo
    • #2
    • 11th Oct 16, 4:44 PM
    • #2
    • 11th Oct 16, 4:44 PM
    Are you sure its 4%? Pretty much all ERC seem to lower the closer you get to the end. For example, HSBC is 1% + 1% for each year remaining.
    • Thrugelmir
    • By Thrugelmir 11th Oct 16, 4:48 PM
    • 51,207 Posts
    • 42,985 Thanks
    Thrugelmir
    • #3
    • 11th Oct 16, 4:48 PM
    • #3
    • 11th Oct 16, 4:48 PM
    • Any ideas on how to get around the 4% penalty?
    Originally posted by The Architect
    None. You knew it existed. Yet proceeded to sell the property. That's the chance you took.

    If you can make overpayments to the mortgage before completion do so. This will at least reduce the impact of the ERC.
    “A man is rich who lives upon what he has. A man is poor who lives upon what is coming. A prudent man lives within his income, and saves against ‘a rainy day’.”
    • The Architect
    • By The Architect 11th Oct 16, 5:41 PM
    • 6 Posts
    • 1 Thanks
    The Architect
    • #4
    • 11th Oct 16, 5:41 PM
    • #4
    • 11th Oct 16, 5:41 PM
    It's definitely 4%. Yes I appreciate I took that chance and was happy to do so with an expected timeframe of 3 months.

    My main concern is that I have received an email from my solicitor and left my job based on that information which turns out to be incorrect, what can do I about this?
    • Thrugelmir
    • By Thrugelmir 11th Oct 16, 5:57 PM
    • 51,207 Posts
    • 42,985 Thanks
    Thrugelmir
    • #5
    • 11th Oct 16, 5:57 PM
    • #5
    • 11th Oct 16, 5:57 PM
    My main concern is that I have received an email from my solicitor and left my job based on that information which turns out to be incorrect, what can do I about this?
    Originally posted by The Architect
    Nothing I suspect. As they merely relayed over information. Which subsequently was found to be incorrect.
    “A man is rich who lives upon what he has. A man is poor who lives upon what is coming. A prudent man lives within his income, and saves against ‘a rainy day’.”
    • muhandis
    • By muhandis 11th Oct 16, 6:09 PM
    • 204 Posts
    • 81 Thanks
    muhandis
    • #6
    • 11th Oct 16, 6:09 PM
    • #6
    • 11th Oct 16, 6:09 PM
    So your solicitor told you that the buyer's solicitor had agreed to complete after 1st Nov. The buyer's solicitor denies having said that. There's either been a misunderstanding or one of them is not being truthful.

    You should definitely query this with your solicitor since he's the one who told you that the buyer was ok with it. If the buyer's solicitor ends up being at fault, the buyer should at the very least share the ERC with you.

    What does your solicitor say? I can't see any reason why he would put in writing that the buyer had agreed to xyz without being told so by the buyer's solicitor.
    • ThePants999
    • By ThePants999 11th Oct 16, 7:15 PM
    • 320 Posts
    • 319 Thanks
    ThePants999
    • #7
    • 11th Oct 16, 7:15 PM
    • #7
    • 11th Oct 16, 7:15 PM
    I doubt you'll want to be this mercenary with a friend, but the nuclear option here is: you just refuse to complete before 1st Nov. One of two things will then happen: your buyer will decline their current mortgage offer and apply for a new mortgage (and likely get one, since they got the current one), or they'll pull out of the purchase. IMO, they'd be nuts not to go for option 1.
    • SavingSteve
    • By SavingSteve 11th Oct 16, 7:27 PM
    • 476 Posts
    • 205 Thanks
    SavingSteve
    • #8
    • 11th Oct 16, 7:27 PM
    • #8
    • 11th Oct 16, 7:27 PM
    Have you exchanged? If not you could just be selfish on this.

    The following comment is telling:
    "The lender will no extend the mortgage offer at all due to a rate change"

    I'd wager that they will extend the mortgage offer at a different rate. That change in rate is your buyers problem, not yours.

    Depends how nice you want to be on this.
    • getmore4less
    • By getmore4less 11th Oct 16, 8:35 PM
    • 26,231 Posts
    • 15,782 Thanks
    getmore4less
    • #9
    • 11th Oct 16, 8:35 PM
    • #9
    • 11th Oct 16, 8:35 PM
    a lot of rates have gone down....
    • The Architect
    • By The Architect 11th Oct 16, 9:18 PM
    • 6 Posts
    • 1 Thanks
    The Architect
    Thanks all, some things I definitely hadn't considered.

    As rates have gone down I guess it's more likely the mortgage company will make the person re-apply to make some money back that they'll be missing out on.

    As all the relevant searches have already been done would it just be a case for the buyer of paying a fee and being done with it or does everything start again?
    • SavingSteve
    • By SavingSteve 11th Oct 16, 9:20 PM
    • 476 Posts
    • 205 Thanks
    SavingSteve
    As long as the buyers situation has not changed it's likely another product fee. Which I'd expect to be less than your 4% erc
    • Thrugelmir
    • By Thrugelmir 11th Oct 16, 10:12 PM
    • 51,207 Posts
    • 42,985 Thanks
    Thrugelmir
    Your solicitor wrote:

    'The buyers Solicitor has advised us that their client’s mortgage offer expires at the end of October. They have agreed to draw down their mortgage funds at this time but wait to complete after 1st November to ensure that you do not have to pay your early redemption fee.'
    Whereas it doesn't it's actually

    I've had no contact with my solicitor since September and was contacted by the buyer today advising that as the offer expires on the 29th of October it must be completed by that date.
    29th October is a Friday. Which means that funds have to be drawn down on 28th. As then

    The lender will not allow the funds to be drawn down and then completed any longer than 24 hours after doing so.
    With Monday being the 31st you are a day out. November 1st being Tuesday.

    Perhaps someone simply got the number of days wrong in October. Strange for a mortgage offer to expire on a non working day though. One wonders who is telling the truth.
    Last edited by Thrugelmir; 11-10-2016 at 10:14 PM.
    “A man is rich who lives upon what he has. A man is poor who lives upon what is coming. A prudent man lives within his income, and saves against ‘a rainy day’.”
    • The Architect
    • By The Architect 11th Oct 16, 10:55 PM
    • 6 Posts
    • 1 Thanks
    The Architect
    A product fee would be a whole lot less than the 4% ERC.

    The buyer is using an intermediary and liaising with them regarding this, is it likely the intermediary will be much happier getting it all done before the mortgage offer expires rather than asking for extension of a few days? I don't know how much work this would require.

    Also how likely is it that it's just another product fee required and no need to go over checks and surveys etc once more?

    Should I ask the buyer to speak with the lender direct? Will they deal with the buyer or only the intermediary?

    Sorry for the 20 questions!
    • stator
    • By stator 11th Oct 16, 10:58 PM
    • 5,049 Posts
    • 3,210 Thanks
    stator
    If 4% is a lot of money then offer them a discount on the price if they agree to the later completion date.
    Changing the world, one sarcastic comment at a time.
    • The Architect
    • By The Architect 12th Oct 16, 4:09 PM
    • 6 Posts
    • 1 Thanks
    The Architect
    Hello all, I've been speaking with my solicitor today and it looks like all will be okay. It turns out the buyers solicitors had been told they could only hold on to the funds for 24 hours when in the mortgage product handbook it says 3 working days which will allow us to complete on the 1st of November and avoid paying 4%.

    It seems that the lenders (HSBC) solicitors who needed to be involved for some part weren't perhaps being completely truthful over the phone, we'll never know but I'll be back when the next problem arises...

    Thanks very much!
    • muhandis
    • By muhandis 12th Oct 16, 6:32 PM
    • 204 Posts
    • 81 Thanks
    muhandis
    That's good to hear, hope it goes smoothly from here on!

    ...when in the mortgage product handbook it says 3 working days which will allow us to complete on the 1st of November and avoid paying 4%.
    Originally posted by The Architect
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