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Mortgage Redemption Fee - getting out of it?
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HenBroon
Posts: 51 Forumite
I've had the excellent fortune to be on a discounted tracker for the last 14 months or so - currently paying 0.85% interest! It runs out next April. However I'm unexpectedly moving abroad. My flat was on the market before the job abroad came up and I've got a really good offer on it so I've decided just to sell up.
However there's a redemption fee of 3% of the outstanding loan if I pay off before the end of the discount period - will come in at a painful 6 grand, totally wiping out all the great interest savings I've made.
Short of keeping my flat and renting it out, which I've considered and decided against, any clever ideas about how to avoid or minimise it? I can overpay 10% a year so I'll do that. Thought about porting the mortgage and using it to buy my Mum's house (which is mortage free and also in Scotland so easy conveyancing) then selling it back to her come April, but I suppose the legal fees and hassle would be considerable.
However there's a redemption fee of 3% of the outstanding loan if I pay off before the end of the discount period - will come in at a painful 6 grand, totally wiping out all the great interest savings I've made.
Short of keeping my flat and renting it out, which I've considered and decided against, any clever ideas about how to avoid or minimise it? I can overpay 10% a year so I'll do that. Thought about porting the mortgage and using it to buy my Mum's house (which is mortage free and also in Scotland so easy conveyancing) then selling it back to her come April, but I suppose the legal fees and hassle would be considerable.
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Comments
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You can't get out of it I'm afraid & will just have to bear the cost or keep the mortgage going.
You signed a contract when agreeing to the terms of the discounted mortgage & the lender will expect you to adhere to these terms.
The only way to avoid paying the early repayment redemption charge is not to sell & leave the mortgage run for the specified penalty period. Or with some lenders/mortgages, penalties are waived on condition you are taking out another mortgage product with them, such as when moving etc.The bigger the bargain, the better I feel.
I should mention that there's only one of me, don't confuse me with others of the same name.0 -
If you rent out you can lose the discount rate, depends on lenders terms.
But how long do you expect to be abroad for? If less than 2 years it might be worth looking at keeping a property over here to come back to as for 14 months you are on a low rate (if allowed to keep).
As for putting on your mum's house you will, as you say, have fees and then another £2000 of repayments to make so it may not reduce the £6k that much.
If your going aboard for good I'd just accept it as part of your moving costs.0
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