Early redemption fee - I just don't understand

fatpiggy

Hi, I'm in the process of remortgaging as my 2 years fixed deal is coming to an end on September 30th. I've just received a redemption statement saying I have to pay an early repayment charge of £1501 and redemption admin fee of £90. :eek: But I'm not redeeming the mortgage early! There is absolutely no way I could summon up £1600 - I could manage about £250 but it would cost me everything I've put away for the next water bill and car servicing etc. As the statement came to me by email (hard copy arrived by post last night) I've forwarded it to my mortgage advisor asking for his help, but so far I haven't had a response, and am in a right panic. I had a similar thing last time I remortgaged, but at least it was only a few hundred pounds and I could pay that - I did contact the lenders but they just gave me a load of financial jargon which meant nothing to me, and by the time I did pay, I'd incurred even more interest. Incidentally, the hard copy letter gives me just 2 days to make the payment!!!! Can anyone help me please?

beecher

Sounds like your new deal has been set up too early as if it didn't start til 1 October, there would be no redemption fee. I'd phone your mortgage advisor and see what's going on, as I take it you discussed with him that your new deal should start in October.

dunstonh

I've just received a redemption statement saying I have to pay an early repayment charge of £1501 and redemption admin fee of £90. :eek:

ERC is to be expected as at this point you still have one and the £90 is very low so I'm not sure why you aer surprised at that figure.

You have asked for a redemption statement and that is what they have given you if you repay it now. Not what you pay after the end of the tie-in period.

You can start the process now but you must insist that the mortgage does not get repaid from the new lender until after the tie in period. Then you dont have to worry about the ERC.

fatpiggy

Thanks, that helps a bit. I don't remember getting an admin fee last time, but I was pretty ill at the time when I was dealing with it and could barely think what my name was, let alone about something I don't really understand. Regarding your comment that if the repayment isn't made until 1st October I won't be charged the ERC, last time, it took weeks to sort out the remortgage, so long in fact that my mortgage had reverted to the standard variable rate having gone past the 2 year fixed deal, but I still ended up paying the ERC, so how did that happen?

I'm rapidly coming to the conclusion that trying to save money is actually costing me more, and perhaps I would be better just going for the lowest standard variable rate for the remaining 23 years and taking my chances with the base lending rate.

This is really depressing me as I've struggled really hard this year to pay off 2 of my 3 debts, just leaving me a £4k overdraft, and now I'm likely to be £5k+ overdrawn again and paying £100 pm interest for the priviledge. I can't pare my spending down any further - as it is I have had to feed myself on only £10 for per week for years , and have only had 1 weeks holiday since 1995.

beecher

Don't panic yet - phone your advisor and see what's going on. Make clear that the new deal isn't supposed to start til 1 October to avoid ERCs. Let him do the work for you.

lisyloo

so long in fact that my mortgage had reverted to the standard variable rate having gone past the 2 year fixed deal, but I still ended up paying the ERC, so how did that happen?

There are some deals where the ERC extends PAST the end of the deal.
It's called an "overhang".
It sounds most likely to me that you had one of these.

You need to get onto your broker ASAP.
If you told him/her when your deal ended then it should be going through on that date.
It's quite possible it's just an administrative error.
Don't panick Mr mannering !!

roddydogs

I just hope your NOT with the Woolwich

payless

Your posts do not make it clear if the new mortgage has actually commenced, or if the redemption statement is just a pre-enquire in in preparation of the swap after 30/9
( you should have had contact from solicitots, and highlighted the date you could swap penalty free)

BTW - I am guessing you are currently with Nationwide did you and you broker explore their renewal deals before deciding to swap ?

ISN-IFS

fatpiggy wrote: »

Hi, I'm in the process of remortgaging as my 2 years fixed deal is coming to an end on September 30th. I've just received a redemption statement saying I have to pay an early repayment charge of £1501 and redemption admin fee of £90. :eek: But I'm not redeeming the mortgage early! There is absolutely no way I could summon up £1600 - I could manage about £250 but it would cost me everything I've put away for the next water bill and car servicing etc. As the statement came to me by email (hard copy arrived by post last night) I've forwarded it to my mortgage advisor asking for his help, but so far I haven't had a response, and am in a right panic. I had a similar thing last time I remortgaged, but at least it was only a few hundred pounds and I could pay that - I did contact the lenders but they just gave me a load of financial jargon which meant nothing to me, and by the time I did pay, I'd incurred even more interest. Incidentally, the hard copy letter gives me just 2 days to make the payment!!!! Can anyone help me please?

hello,

Check within your offer letter if there is a thing called early repayment overhang. this is when there is extra tie in period after your fixed rate period.

i hope this helps