Final Repayment Charge

vixtrix

I have just had an illustration from The Woolwich for re-mortgaging my home. On the phone she assured me that there was no early repayment charge so there was no tie in and yet I have just discovered in the small print that I am liable for a final repayment charge of £275 when I pay the mortgage off in full - is that not exactly the same as it means I can't re-mortgage within the next 25 years without paying £275!!!

I am looking to take out an offset mortgage as I have £54,000 outstanding on the mortgage and £40,000 in savings, which we need to build an extension (so I can't pay the mortgage off). I just presumed that I might as well save 5.1% on the mortgage than put it into savings and only get around 4.9% before the taxman knocks on the door.

Has anyone got any advice? I need to re-mortgage before the end of September because my old mortgage is about to go to 6.8%. Do all mortgages have this final repayment charge so should I just swallow it??

TangentMan

It is an admin charge for winding up your mortgage early. If you went to term (25 years?) you wouldn't incur it. It isn't an Early Repayment Charge (which is normally linked to some sort of preferential rate period - such as fixed for x years).

There has been quite some chat about this and there are several threads about challenging the charge.

Your old mortgage (is that also with the Woolwich because i think they do an internal remortgage deal that reduces the overall cost) will also in all likelihood have the same charge although it might be called something different (Deeds Admin Fee and so on). Most lenders have them.

You can try to challenge the charge, but only once you have been charged it. Its unlikely anny lender will waive the charge so far in the future.

vixtrix

Thanks Tangentman.

Yes I am just swapping rates within the Woolwich and in an ideal world I hope to stay with them for the 25 years so it wouldn't matter - I am just concerned that as it is a tracker mortgage, if the rates went sky high and I wanted to find a cheaper mortgage before 25 years then I would have to pay. But as you are suggesting that all lenders have it in some shape or form I guess I should just swallow it.

Thanks for the advice - mortgages tend to leave me a little bit brain dead.

Vix.

kt

TangentMan wrote:

It is an admin charge for winding up your mortgage early. If you went to term (25 years?) you wouldn't incur it. It isn't an Early Repayment Charge (which is normally linked to some sort of preferential rate period - such as fixed for x years).

There has been quite some chat about this and there are several threads about challenging the charge.

Your old mortgage (is that also with the Woolwich because i think they do an internal remortgage deal that reduces the overall cost) will also in all likelihood have the same charge although it might be called something different (Deeds Admin Fee and so on). Most lenders have them.

You can try to challenge the charge, but only once you have been charged it. Its unlikely anny lender will waive the charge so far in the future.

My case is slightly different in that I wish to pay off my mortgage. 2yrs ago I changed to a Flexible mortgage - still with the Woolwich. I was assured at this time that there would be not Final Redemption Fee as I knew that I would probably pay off the mortgage early. I received a letter at this time stating that there were no Early Repayment charges. However now they are telling me that I have to pay £275 Final Repayment charge to settle my mortgage. I am very angry about this as I feel I have been mislead. I have not been informed about this charge. They have advised me that they were going to tell me in my annual statement. I have not received this yet. Can I try and get away without paying any charge as I have been mislead or would it be better to say I will pay the £180 which was shown on last years annual statement?

It has also occurred to me that if I pay off all the mortgage leaving say £300 to pay off at £5 per month over the next 4yrs 3months it would be less than paying the Final Repayment Fee. Would I get away with this? Or are there rules relating to how much money is left outstanding on a mortgage account?
Your comments would be appreciated.