£6000 early termination fees? GE Money

Gareth83

A friend has a house and secured loan with their ex, they also owe the family a substantial amount of money.

Their house has been up for sale for just over a year (was £115,000 but now up for £110,000)

They had received an offer of £98,000 and subsequently a full and final offer of £102,000 which has been accepted so not to lose out.

This figure still doesn't clear their total debts.

The friend thinks they can ask for more money but I've suggested this will probably lose them the sale.

There are £6000 of early termination fees which will be applied so the total cost of repaying the mortgage at present will be ~£93,000 + ~£5k secured loan and after the estate agents and solicitors fees etc. there will be little to pay the family back.

One idea is to wait till November when the £6k fees will be dropped, but due to the declining market and the fact the friend will be tied to the ex (awkward situation) I think it's best to cut the losses and get out now. If house prices were to drop further there could even be negative equity and if they were to rent the house out it could cost them more in terms of building insurance, rental fees etc.

My question is is the £6k fees stated by GE Money fair or is there a way around this?

Failing that, could half the mortgage be transferred into someone else's name and a new property be purchased with it? So effectively there would be a £87k mortgage but on a new house?

What's the best way around this awkward situation?

dunstonh

One idea is to wait till November when the £6k fees will be dropped, but due to the declining market and the fact the friend will be tied to the ex (awkward situation) I think it's best to cut the losses and get out now.

i would agree. House prices are on track to be around 10-15% lower by November. Plus you have another 10/11 months of repayments.

My question is is the £6k fees stated by GE Money fair or is there a way around this?

Totally fair and no way round it. You take the special deal in return for a tie in. If you break the tie in you pay the charge. The charge is fully disclosed in multiple places in advance and is part of the contract letter.

could half the mortgage be transferred into someone else's name and a new property be purchased with it?

In a roundabout way yes but not in one transaction. It would have to meet new criteria though and it would involve a different lender.

Gareth83

dunstonh wrote: »

i would agree. House prices are on track to be around 10-15% lower by November. Plus you have another 10/11 months of repayments.

11mths of repayments will be around £6k and seen as the friend has rented their half out there is no benefit in the long run I can see of waiting to avoid the £6k fees.

Totally fair and no way round it. You take the special deal in return for a tie in. If you break the tie in you pay the charge. The charge is fully disclosed in multiple places in advance and is part of the contract letter.

Fair enough

In a roundabout way yes but not in one transaction. It would have to meet new criteria though and it would involve a different lender.

Could you elaborate on the latter part and how this could be done as like I have said the situation is complicated - but there would certainly be someone willing to take on the mortgage if a new house could be found.

Thanks for your reply

silvercar

Involving a new lender will surely mean that GE money would be entitled to their ERCs.

Gareth83

dunstonh are you there? ;-)

dunstonh

It would require a new lender and a new borrower and of course a new house.

Gareth83

so it's a case of bite the fees and move on....