Paying off a mortgage and being charged a fortune!!!!

CtotheT

Hi!

We bought a house in March 2007 and got an interest only fixed for two years mortgage from Barclays. We noticed on the contract that we signed that we would have to pay 6 months interest if we are paying off the mortgage early.

In January 2008 my Great Aunt dies and leaves me her house. So we have now sold our house and we are doing up her house to move into.

Would we still have to pay the 6 months interest or could we somehow get the repayment lowered?

Thanks!!!!!

happybroker

you could potentially transfer the mortgage to the new house until the early repayment clause expires and avoid the early repayment charge though you would no doubt end up paying interest on the mortgage for more than 6 months.

did you receive a recommendation for this mortgage or was it a non advised sale? If you had a recommendation you should have clearly had the early repayment charges pointed out to you.

Barlcays aren't going to lower the charge, it isn't after all their fault you have had a property left you.

poppy10_2

Can't you just wait till the ERC period ends in March 09 ?

Fishingtime

Can you not pay some of it back early?
If you owe say £10000 pay back £9999.
That way you only have to pay interest on the remaining pound till the deal ends

_Andy_

yoxford2008 wrote: »

Can you not pay some of it back early?
If you owe say £10000 pay back £9999.
That way you only have to pay interest on the remaining pound till the deal ends

They'd still be charged the early repayment charge on that amount.

happybroker

yoxford2008 wrote: »

Can you not pay some of it back early?
If you owe say £10000 pay back £9999.
That way you only have to pay interest on the remaining pound till the deal ends

early repayment charges would be made on the £9999 so would pointless

Rabiddog_2

Overpay as much as possible without charge, then simply work out at what point the ERC becomes less than the interest you would have to pay (probably never). The fix was for two years, how long does the ERC last for? and How much are we talking about. I suspect you will simply have to pay as a consequence of getting that particular mortgage. Look on the rest of your good fortune and be thankful, with regret for your loss.

JimmyTheWig

happybroker wrote: »

did you receive a recommendation for this mortgage or was it a non advised sale? If you had a recommendation you should have clearly had the early repayment charges pointed out to you.

Presumably at the time you didn't know you were due to be left this house within the two years. So given the known facts this may well have been the best mortgage.

you could potentially transfer the mortgage to the new house until the early repayment clause expires and avoid the early repayment charge though you would no doubt end up paying interest on the mortgage for more than 6 months.

This to me sounds like the best idea.
Lets assume that the early repayment charge is only due if you pay it off before March (i.e. 2 years from March 07). This is an assumption as a two year deal isn't always for exactly two years.
I suggest the following...
1. You port the mortgage to the new property (as per happybroker)
2. You make the maximum overpayment you are allowed without having to pay a fee (probably 10%). Tell them you are making a capital repayment and don't want to descrease your monthly repayments.
3. You will then end up paying mortgage interest on the balance for seven months. 90% of 7 is 6.3, so this is like paying mortgage interest on the whole lot.
4. Put the money you wuold have paid the mortgage off with into a savings account *. This will more than make up for the 0.3 of a month extra that you are paying mortgage interest on.
5. Pay off the mortgage on the first day you can without being charged.

* Note that this will probably take you over the government protected limit if the bank goes belly-up. You may want to consider a protected institution, or spread the money between different banks.

oxmatt

the only option is probably to port the mortgage (if possible) or pay up. As the OP is selling the mortgaged house Barclays will not let the mortgage carry on once it is sold!

You could consider renting it (or the inherited house) out until the fixed rate period is over.

JimmyTheWig wrote: »

Presumably at the time you didn't know you were due to be left this house within the two years. So given the known facts this may well have been the best mortgage.


This to me sounds like the best idea.
Lets assume that the early repayment charge is only due if you pay it off before March (i.e. 2 years from March 07). This is an assumption as a two year deal isn't always for exactly two years.
I suggest the following...
1. You port the mortgage to the new property (as per happybroker)
2. You make the maximum overpayment you are allowed without having to pay a fee (probably 10%). Tell them you are making a capital repayment and don't want to descrease your monthly repayments.
3. You will then end up paying mortgage interest on the balance for seven months. 90% of 7 is 6.3, so this is like paying mortgage interest on the whole lot.
4. Put the money you wuold have paid the mortgage off with into a savings account *. This will more than make up for the 0.3 of a month extra that you are paying mortgage interest on.
5. Pay off the mortgage on the first day you can without being charged.

* Note that this will probably take you over the government protected limit if the bank goes belly-up. You may want to consider a protected institution, or spread the money between different banks.