early repayment charge

clutton_2

""how else do you think the lender was able to offer you the deal in the first place?""

many mortgage products offer you a trade-off - smaller interest rates and thus lower monthly repayments, with high ERCs; or no ERC's and higher interest rates and higher monthly outgoings.

A mortgage product with no ERC's at all, can be redeemed (house sold and mortgage paid off) in days of the original completion date - the Lender has to make some money on each product, else there will be no money to lend FTBs' and other mortgage applicants.

You have to decide when buying whether you will want to move early, or not. If you;re not sure, maybe go for no ERC's, it may cost you less in the long run.

ooobedoo

I'm not the brightest button in the box when it comes to stuff like this, I am dyslexic and find it hard to read long passages of writing. I normally leave it to my husband but even he overlooked this bit.

We pay £600 a month on the mortgage currently, the house is just going thru now, we move into the cheap rental on the 20th Oct(get the keys and start paying on the 13th Oct) just so we can paint etc etc

We will just have to take the hit. Thank you for all your advice

regularsaver1

If you take a mortgage - you will get a Key Facts Illustration and then mortgage offer - all of which state the Early Repayment Charges that apply.

For example - if you take a fixed rate you will always be tied in - and so have a early repayment charge to come out. that is how you were given you fixed rate in the first place. If you did not want an early repayment charge then most lenders will offer products without them - but often at a higher interest rate

The only ones that people could possibly argued about are the administration fees - ie £295 with A&L, £175 Halifax

lilyann1

We had to pay an early redemption charge a few years ago of nearly £2k,but when you think what you are getting for it and how much it saves you in the long run then it is worth it sometimes.
If you are moving into rental then the interest you will be earning on your money will help you account for the ERC.
You can try delaying completion til January but then you risk losing your buyers if they want to move in before Christmas.

housebuyer_3

Unfortunately most contracts are too long and people don't bother to read them - but as soon as we sign we are agreeing to the terms. I just paid an early redemption penalty and it wasn't nice to stomach but it was what was agreed (3 months interest).

I did try to move the mortgage to another property to prevent this but couldn't find a suitable one in time.

jamminjamaica

it is horrible isnt it? as if the mortgage company dont get emough money off us.

housebuyer_3

Just been in for another mortgage application - instead of an early repayment charge, you can get a better deal but may have to pay around £1000 in application fees for the privelige!?! My financial advisor says this becoming the norm now.