Mortgage Early Repayment Penalty (charge)

Cellbydate

I remortgaged my house in June last year, and bought a new house in December. I'm currently selling the old house and wish to port the product. I'm told I have to surrender the product and reapply.

Originally this was arranged as a fast-track application, now they say that can't apply and I'll need to be credit scored. I know that won't stack up against income, therefore I have two options; either cancel the sale of the house or surrender the mortgage and pay the penalty currently 10.3k.

I accepted the terms of the mortgage in good faith and haven't defaulted on payments. Are they within their rights to change the terms, forcing my hand? Are they foreclosing on me, and if so am I liable to pay the early repayment charge? The mortgage details clearly say the product is portable.

Kind regards,

dunstonh

Are they within their rights to change the terms, forcing my hand?

You are the one asking for the terms to be changed by changing the property.

Are they foreclosing on me, and if so am I liable to pay the early repayment charge?

No. You are making that choice.

The mortgage details clearly say the product is portable.

Portability is still subject to acceptance. So, I would ask them for written confirmation that they are not willing to port the mortgage even if you meet their current lending criteria.

The most common stance is that you can port your mortgage deal providing you meet their current lending criteria. Who is the lender? The mortgage advisers here should be able to verify what their current stance is on portability.

Cellbydate

Hi Dunstonh

Thanks for your reply. I don't want to change the terms, just port the product. If the new property has sufficient value, I assumed there wouldn't be a problem.

The 'Mortgage Record of Suitability' states:
Portability
This mortgage is portable. This means that if you move home during the term, you can transfer this mortgage arrangement to your new property without incurring any charge. Please refer to your Key Facts Illustration for full details of any conditions that may be applicable.

Key Facts states:
4. Description of this mortgage
Restrictions on this mortgage - No restrictions apply

C&G Mortgage Loan Agreement states:
What happens if you move house?
If you move house, provide that we are satisfied with the new property and that you can afford the repayments, you can take the terms of this mortgage with you.
You will not have to pay the early repayment charge, where one applies, if, at the same time you repay this mortgage, you take a out a new mortgage with us for the same amount and which continues on the same terms as this one.

It would appear the Loan Agreement gives C&G a get-out, whereas the Key Facts from the broker make portability under the same terms and conditions seem easy. Is there any way out for me, besides canceling the sale of my old property, or continuing the sale and paying the ERC?

Kind regards,

dunstonh

C&G will still port mortgage deals as long as you meet their current lending criteria.

It even says it on their website: http://www.lloydstsb.com/mortgages/buying_a_new_home.asp

Stay on your current rate – by just moving your home and not adding any more to your loan you can take your current deal with you so there’s no need to shop-around, saving you time and effort to spend on more important things.

Whoever is telling you that you have to redeem and rebuy is either mistaken or is trying to hit a sales target.

happybroker

Cellbydate wrote: »

Originally this was arranged as a fast-track application, now they say that can't apply and I'll need to be credit scored. I know that won't stack up against income, therefore I have two options; either cancel the sale of the house or surrender the mortgage and pay the penalty currently 10.3k.

It's this bit that bothers me.

Has your income dropped since the original application? If so, the lender does not have to allow you to port, portability is always subject to you meeting the lender's criteria at the time you make your new application. It will definitely be in the T&C's some where.

If your income hasn't dropped and the reason for the fast track was to use a spurious figure then unfortunately the past has caught up with you I'm afraid and you are lucky that you weren't asked to prove your income at the time, something the bank were well within their rights to do.

dwsjarcmcd

dunstonh wrote: »

Whoever is telling you that you have to redeem and rebuy is either mistaken or is trying to hit a sales target.

When you port you do need to redeem the original mortgage as the security offered to the bank has changed. The original property cannot have two first charges registered against it, which is what you would effectively end up with if the original loan was not redeemed.

_Andy_

Sounds like the original application was a fraudulent fast-track job. Nice.