Early Settlement Figure For First Plus Loan

isomais2

Hello all - Please dont judge me on my level of debt! We have a First Plus Loan for £60000 taken out over 300 months (270 left to run). The monthly interest rate is 0.621%. Could anyone advise me of the overall settlement fee please? I have contacted FP but they said it would take a few days.

plane_boy2000

My very crude maths would indicate that you are paying about £445 a month?

If so I would estimate that to repay the capital now you would need about £57,700 but you dont mention if any fees etc were added at the begining plus there may be discharge fees etc.

jamesd

At 30 months run so far, it seems that you took it out before 31 May 2005. That exposes you to the potential for high penalties.

So, also ask First Plus for a "settlement quotation" for a settlement date of June 1, 2007 with the settlement covered by the "Consumer Credit (Early Settlement) Regulations 2004". Those rules will limit the penalty to two months interest maximum.

They are allowed to charge high settlement amounts including a large chunk of interest. Quite possibly larger than the total monthly payments for waiting the 9 months until the new rules apply to old loans.

If you had taken it out on 31 May 2005 or later, the penalty for settling early can't be more than two months and this limit would already applies to the loan, no need to wait.

One caution. I think that the amount is larger than the limit covered by the normal consumer credit loan rules and I do not know what happens when that is the case, so this information could be incorrect. If you get a settlement amount which is inconsistent with them, seek more assistance.

isomais2

Yes my monthly fees are £442. We are selling our house and have £60k available to pay off the loan but really need to know how much extra this early settlement will incur. We worked out that it could be about £6k extra? Does this sound right or will we be in for a nasty surprise? Thanks to all who reply!

dunstonh

First plus have large early settlement fees normally so you will probably find yourself around the £60k mark despite what you have paid already.

jamesd

If it's going to cost you 6000 waiting is probably best, once you find out what it'll be if you wait. You can get 5.1% in a savings account or more in a notice account so it'll cost you something under 3% in difference while you're waiting - 3% on the full 60,000 for nine months would be about 1350. Well worth paying if it saves you 6000 in penalty!

isomais2

It says on the small print of this £60000 loan that to settle we must pay the balance of the loan, interest up to the settlement date plus interest for another 120 months! I cant delay moving house until next year when the new charges come in unfortunately.

Xbigman

Do you mean 12 months? If it is 120 months thats 10 years interest on 60k!
Regards



X

jamesd

First Plus do not know that you want to move earlier. Ask them about the amount on June 1, 2007 with the new rules applying. Then ask them if they are interested in making an offer to you now somewhere between the two rates instead of losing 118 of the 120 months of interest through a redemption in June 2007. They might offer something between 11 and 120 months so long as they do not know that you are under time pressure.

You should also discuss your situation with an independent whole of market mortgage broker. it's not uncommon for mortgages to ignore debt that will be gone within six months or a year of the start of the mortgage. This might allow you to either directly get a mortgage or get a mortgage higher by enough to cover both the purchase and the loan repayments until you can clear the loan more cheaply in June. You could also mix the mortgage with an independent say 3 or 5 year loan of the amount of the payments until June, adjusting the term to make the combined payments affordable to you. Then you could clear this shorter term loan under the new rules.

isomais2

It definately says 120 months from settlement date. Yes 10 whole years worth of interest on a loan we will have paid off. We have to move. We cant afford to stay here. The Abbey will give us a new mortgage but only if we repay all of the FP loan. I'm absolutely gutted!

jamesd

Talk to a mortgage broker. Ask Abbey if they will give a mortgage with the loan added to the mortgage and the loan repaid once the redemption charge has reduced. Ask about other lenders. If the problem is income multiple or affordability, consider a different lender with more relaxed limits. Find out what the Abbey concern is - whether it's affordability at the payment level you have or simply the ourstanding debt level.

But first, play with First Plus and see how far they will go when you "threaten" them with waiting for the new rules if they don't come up with a better offer.