Early Re-payment charge, excessive?

davidscot

Weve just received our annual mortgage statement from Nationwide.
Anyway after checking the statement (a bit more closely than usual:o) I discovered that the early repayment charge would be over £2700. Our deal ends in September this year and I had been looking around at deals on offer at the moment. If we ditched our current fixed rate deal now this early repayment charge would kick in I guess. So is this charge of around £2700 the normal going rate or is it rather excessive?
Thanks for any help.

ginvzt

I guess that is what you have signed up for. You don't say how much you owe, so no one would be able to tell you if it is excessive or not. If it is £2700 on £10000, then probably yes, it is on th ehigh side, but if you owe £1000000, then it is very little.

CloudCuckooLand

3% of the loan is fairly common...depends what you owe.

davidscot

Yes I guess I must have signed up for it -without reading the small print :mad: but I was just wondering if this was the norm.
As to how much I owe then its just over £65k on a property worth more than double that.

Engeroosi

If you can get a mortgage offer in writing it is usually valid for a period of time, which might take you up to september and therefore you won't have to pay the ERC.

dunstonh

So is this charge of around £2700 the normal going rate or is it rather excessive?

ERCs are in place where you buy a mortgage deal and get special terms. The ERC is a charge to cover the lender if you pull out early as they can suffer heavy costs if you do.

Its similar to if you have a mobile phone contract and they give you a phone. They tie you in or you pay a charge if you exit early. Of if sky give you a free digibox you then get tied in or penalty. The reason £2700 seems higher is because a mortgage is more money than a mobile phone or sky contract.

Yes I guess I must have signed up for it -without reading the small print but I was just wondering if this was the norm.

The ERC appears on both the contract and the key features illustration. It is also usually fairly prominent in the mortgage advert for that deal. Its not in the small print.

tyllwyd

We've got a Nationwide mortgage, and they specify the current ERC on the mortgage statement every year (for us, its 3% of the amount redeemed). So its quite a lot of money, but the information has been provided, right from the start.

davidscot

Ok I'm maybe using the term 'small print' out of context here.
The main point was that is the ERC high or is that a usual kind of figure.

beecher2

I'm not sure whether it matters if the ERC is high or not - it is what you have to pay if you get out of your deal early, regardless. Just make sure you're aware of an ERC on your next deal, if in fact you go for one - might be a better option to stay on the SVR.

davidscot

beecher2 wrote: »

I'm not sure whether it matters if the ERC is high or not - it is what you have to pay if you get out of your deal early, regardless. Just make sure you're aware of an ERC on your next deal, if in fact you go for one - might be a better option to stay on the SVR.

Yes I understand that, I was just wondering if the figure quoted was high or a normal sort of figure.
I seem to be getting it in the neck for just asking re figure:p

dunstonh

I seem to be getting it in the neck for just asking re figure

you are not getting it in the neck. You've been on this board often and long enough to know what getting it in the neck can really be like!!

However, certain wordings could potentially encourage blunter responses such as:
is it rather excessive? - you agreed to it so why not query it when you bought it.
yes I guess I must have signed up for it -without reading the small print - you didnt read the contract or the KFI but try to blame in on small print when it isnt. Use of angry smiley doesnt help.

If you want to see getting it in the neck, do a post saying you have been mis-sold when you havent been and its clearly your own error. Thats when you want a flack jacket on - smiley added to ensure you take the post in the way its meant