Advice needed on getting out of a new fixed-rate deal

Hopper1975

pfpf wrote: »

if it was a good deal for you when you accepted it, its still a good deal, take it.

5 years is a long time and int rates may well go up in that time and fixed rates may become much higher.

its a guessing game at best, the £3499 fee would make me go ahead with the deal assuming you would lose the fee anyway.

It certainly is a guessing game, and you have to make the best decision at the time with the available evidence. I'm still not convinced it is a good deal, as it looks like the consensus is that rates will remain low for some time. Sitting on the SVR for a while until things become clearer would not necessarily be a bad thing.

gogsboy

I also went for a 5.49% or thereabouts, forget if I opted for 3 or 5 yr though, must check on that....

However I never paid any fee at all, £3.5k that's crazy, how can the banks be in trouble!

Is it cost effective to buy out the fixed rate normally given that they reckon the cut will be passed on?

Baz_2

adandem wrote: »

I arranged a fixed deal a few weeks ago to start in December. In my T&C's it says that if I switch to another product with them, I pay ERC, even if the deal isn't in effect. That's with YBS.
I'm no financial expert but I do think that alot of long term fixed rates will be pulled, the same as tarckers or the fees will be much higher.

That can't be true.

You can't pay an ERC for a mortgage that hasn't been drawn down let alone been repaid.

I'm assuming that is once the money has been drawn down by the YBS solicitors, which won't happen until a few days prior to completion.

Hopper1975

Baz wrote: »

I wouldn;t go on the SVR though, I would hope they come out with a better fix.

If you go on the SVR and they still take the fee you are setting yourself up for a double wammy when the rates go back up above the fix you could have had.

If you can;t get a better fix off them, I would stay with the deal you have signed up for. If they come out this week with a 4.99% fix for example, get them to switch you to that.

At least that way its not giving them £3.5k for doing something you would have done had you done nothing. With your fix, you still get something. Rates won;t be this low forever.

Also, I take it you have had your offer letter? Have you paid the fee? Normally the rates are only guaranteed once the fee has been paid. You need to dig out the terms and see when they constitute the deal being binding.

Maybe you should get an IFA to look into it for you.

You're right, the best hope is for a renegotiated fixed-rate, I would be fairly happy with that to be honest.

I haven't actually paid the fee as yet. I'll have a look at the T&Cs forthwith!

adandem

It's a remortgage, we are not moving house, so the money has been reserved at that rate.
It does state this clearly in our terms and conditions.

Baz_2

adandem wrote: »

It's a remortgage, we are not moving house, so the money has been reserved at that rate.
It does state this clearly in our terms and conditions.

And your happy with that? I take it you are remortgaging from another lender?

A remortgage still has a completion date.

I have a set of T&C's for remortgaging and an offer letter from YBS in front of me now, where are you picking up that clause? Is it from the offer under repayment charges in para 10?

Also, in bold right at the end it says

"Once the loan monies have been released to our legal advisor and yourmortgage has completed you will not have the right to withdraw. However you will have a right to repay the loan in accordance with the T&C's of your mortgage. For example this would mena that any early repayment charges referred to in this mortgage offer would need to be paid as part of the repayment of the loan."

So pretty conclusive that as long as the funds haven't been released you can withdraw without any ERC's. If you can prove otherwise I woudl be very interested as I plan to do exactly that with my offer from YBS.

mic200202

Hopper1975 wrote: »

Hi,
About 2 months ago I approached Natwest about negotiating a new rate, as my initial fixed-rate deal comes to end in December. After some negotiating I managed to get offered a 5.45% deal, fixed for 5 years but with a £3499 product fee. This was before the 0.5% and 1.5% base rate cuts, when the SVR was at 7.19%, so this looked like a very attractive deal despite the high arrangement fee, bearing in mind this was before there was before any of serious base-rate cuts. Just before accepting the deal, the base rate was cut by 0.5% so I asked Natwest whether they could improve the deal but they couldn't do so, I therefore verbally accepted the rate.

Since then the SVR has come down to 4.69% - well below the 5.45% I would be paying. I am therefore in the position where I am paying £3499 to pay a higher rate!

The rate is noy yet active and doesn't come into effect until Dec 1st. Ideally I would like to either cancel the deal and stay on the SVR, or to walk away from Natwest entirely. I have been in contact with Natwest, but they say the fee is non-negotiable as I have verbally accepted. Any advice would be most appreciated.

You need to be clear about this fee.Was it to be paid separately, or to be added to the loan? You should see this information on the Key fact illustration they should have sent you - look for the section on fees and charges.If the fee was to be added to the loan,then I see no reason why you couldn't walk away from the deal as you are entitled to change your mind.The verbal acceptance would not be sufficient to enforce this in my view.I would expect to see some type of confirmation letter, at the least ,being sent to you with a declaration to return. You may have to complain (in writing) to Natwest to get this resolved.

adandem

No, it's a product transfer. Section 10, What happens if you do not want this product transfer anymore?

You will not incur an ERC unless you repay the loan in full, transfer to a different product or transfer to our SVR.

Hopper1975

mic200202 wrote: »

You need to be clear about this fee.Was it to be paid separately, or to be added to the loan? You should see this information on the Key fact illustration they should have sent you - look for the section on fees and charges.If the fee was to be added to the loan,then I see no reason why you couldn't walk away from the deal as you are entitled to change your mind.The verbal acceptance would not be sufficient to enforce this in my view.I would expect to see some type of confirmation letter, at the least ,being sent to you with a declaration to return. You may have to complain (in writing) to Natwest to get this resolved.

The fee was to be added to the loan. I hoped this would be the case and I could walk away, but Natwest were pretty adamant that I could not get away from paying the fee. It seemed a little unusual that a verbal acceptance would be enough for such a complex product.

Baz_2

adandem wrote: »

No, it's a product transfer. Section 10, What happens if you do not want this product transfer anymore?

You will not incur an ERC unless you repay the loan in full, transfer to a different product or transfer to our SVR.

But thats assuming the transfer has completed and you don;t want it anymore. It's not saying you have to pay ERC if you change your mind before you have actually transfered products. It certainly doesn't say that from what you have quoted there.