Early Repayment Charges

Matt1069

Hi, names Matt, just registered as i have a bit of a problem and a friend recommended i come here and post a thread to discuss...

Basically, i brought a house 5 years ago, and pleased to say its just over doubled in that time, and recently decided to take the next step and purchase another house for a buy-to-let, admittedly I'm not looking for a monthly profit, it's purely for ambition/investment purposes,

I can happily supply details of purchase cost/ expected rental income if needs be,

Everything has been going smoothly since i had my offer accepted a few weeks ago, both re-mortgage(for deposit) and buy-to-let mortgages applications accepted no problems...

But, yesterday i rang Abbey (my current lender) to notify them that I'll changing lenders, and i was surprised to hear the news that my Early Repayment Charge is STILL in force and will be until 7th Jan, I've been with Abbey 5 years this month now, and fully expected that charge only to be in force the first 2/3 years...The penalty will be £2100

Initially when i took out the mortgage i had a 2 year fixed rate, and for the last 3 years I've had a flexible rate, of which I've mostly been paying extra too, not that probably makes any difference though, a quick calculation tells me I've paid them over £20k, approx 70% would of been interest...

So the reason I've come here is for advice, the Abbey Cus Support lady i spoke too advised my to put my situation in writing to them, do you think its worth it? I mean, its only 3 more payments after next week, are they really that tight and gonna make me stay with them till the end, which isn't really an option because I'm re-mortgaging with a different lender for the 20% deposit for the new house?!

Anyway, thanks for reading so far, thanks for any advice!

silvercar

if you feel you weren't told that the redemption charges would continue until January then you could complain. Check your Key Facts document to see if it is included in that.

They may very weel stick to the rules if they are satisfied that you were told about them. Is it to late to remortgage with them?

Matt1069

Thanks for the quick reply SilverCar, when i spoke to Abbey i was told this would of been in my terms of conditions, and as for writing the letter, it wouldn't be a complaint, more of a plea for leniency, and be 'released' just a few months early, i'd be happy to pay a reduced fine if possible, perhaps the few months interest that they would lose out on, approx £600

As for re-mortgaging with them, yeah, i guess that could be an option, but i'd lose the valuation fee and admin fee (total £438) that i've already paid ,and im not sure if Abbey had a good deal compared to what i got, can't speak to mortgage advisor till monday morning and im impatient which is why i came here!!!

Thanks again

A_Nice_Englishman

The early repayment charge might be eligible for tax relief which would reduce it a bit. Perhaps someone with more knowledge of taxation could advise?

Looking at it another way, presumably you have made allowance in your business plan for the void periods, costs of evicting bad tenants, bad debts, rises in interest rates, unexpected repairs, falls in property values and all the other hazards of running a rental business? The £2100 (or £438) could come out of that.

mountainofdebt

We have a mortgage with Abbey and the deal that we have with them states the date that the early redemption penalty period ends.

If we make any additional payments before then there is a sliding scale of charges.

As we knew this date when we took out the deal presumably you have had similar information as well so I am not quite sure why you are so surprised.