early redemption fee's

thepcsaysno

Having had no deposit or books we were advised to go to a non high street lender. We have been paying £725 per month (6.73%) to service a £130000 morgage interest only. We went to a high street lender & was accepted for a morgage with a good rate of interest. However we the went back to our existing provider who say they want £4500 to release us obviously we do not have the funds, it seems we are being blackmailed to stop with them, any help or advice? PLEASE

regularsaver1

You redemption penalty was most likely in your offer though

at the end of the day they helped you

Ian_W

The redemption penalty has to be disclosed to you in the key facts illustration and in the mortgage offer you signed to accept the mortgage. If it isn't, then they can't AFAIK spring it on you as "blackmail" to prevent you leaving them.

However, if it is in the agreement you signed it's a binding contract so if you want to remortgage before the penalty period ends you'll have to pay up. You should find out how long the redemption penalty lasts for and, unless the figures add up for you to pay it and leave, bite the bullet and wait until you're penalty free. I'm not unsympathetic but if it's something you agreed to to get the loan in the first place - they've every right to expect you to abide by the conditions, just as much as you have a right to expect them to.

thepcsaysno

Hi, having spoke to the derbyshire tonight they say that it's 4% in first year 3% in second year and 2% in third year and wait for it........1% until the end of the agreement thats not 1 months notice with no penalties. Quite frankly this whole thing stinks. OK they help you out, But you pay WELL over the odds, then when you can get a mainstream lender they want even more to release you. I signed an agreement with the Abbey for a current account agreeing to there charges however when it got to over £1000 in 6 mths I threatened court action & in return was rewarded with £865 back in UNLAWFULL charges as a goodwill guesture.
There must be something out there to stop these companies doing this. How unfair is it when you don't have a lot they hammer you even more with high rates & charges. At the end of the day if you can't pay it they will reprocess it so why can't there be an even playing field for everyone???
Anyone reading this who gets hit with high rates will say the same, it's about time we got together & made our feelings felt as this is unfair. To put this in perspective we had a mail-shot from the provident offering £200-£500 with 117% apr how can this be fair........

jamesd

What does the key facts illustration say about all the terms -including the initial interest rate or rates and how long they last for? Did they say that you could leave with one month's notice with no penalties? With no early repayment charges? Was it a fixed rate? A discounted rate? When did you get the mortgage and when does the tie-in end?

What are all the terms for the new mortage you've been accepted for?

"we were advised": Did you use a mortgage broker for the first mortgage? If so, did they specifically suggest that lender and that exact mortgage? This could be a route to recovering some money if the broker gave you inappropriate advice, since they are required to provide the best advice for your situation.

Please say more about your current situation. Do you have any bad debt problems on your credit reports? If still self-employed, do you now have accounts to prove income?


At the moment the Derbyshire offers a range of options but the standard tracker mortgage doesn't have any penalties or early repayment charges. Here's a selection:

lifetime tracker: no initial charge, 5.75% (BoE+0.75%). No ERC. (the basic mortgage deal)

'2 year' tracker: 495 initial charge, 5.05% (BoE+0.05%) until 30-11-2008 then 5.75% (BoE+0.75). No ERC. (pay a fee, pay less interest)

'2 year' fixed rate: 595 initial charge, 1.85% until 30-11-2008 then SVR 7% for the rest of the term with ERC for 6 years: 5% for 1 year, 6% for 2 years, 5% for one year, 4% for 2 years. (agree to a tie-in and we'll lend you the money for a while and recover it in higher interest later. We'll also charge you more for the interest rate protection)

david29dpo

first all all, with mortgages, normally the better the deal, the bigger the redemption penalties if you pay it back within the discount period. this is fair. i have just switched to a new deal with 2% off for 3 years with penalties for 3 years so i with not be changing for 3 years, simple. did anyone hold a gun to your head when you signed? also with knocking up £1000 in bank charges in 6 months, i would be surprised if anyone will give you a mortgage, sorry.

Robert_Sterling

thepcsaysno wrote:

it seems we are being blackmailed to stop with them, any help or advice? PLEASE

Advice: Before signing up for a loan always make sure you understand the terms and conditions.
You would rightly object if they broke the terms and conditions to your disadvantage.

Conrad

thepcsaysno wrote:

Quite frankly this whole thing stinks. OK they help you out, But you pay WELL over the odds, ..

You need to understand risk v reward in business.

Imagine you are an investor (the Derbyshire effectively invest thier money in borrowers in return for profit).
As the investor you can lend to low risk people in return for a low return or you can lend to higher risk people in return for a higher return.

As the investor you must 'lock - in' your profit, you cant take all that risk and spend lots on marketing and providing the service if your higher risk customers can then simply break the deal and leave you without sufficient profit to have justified the extra risk.

The only alternative an investor has is to charge ALL BORROWERS more in order to subsidise the higher risk borrowers, but that of course wouldnt be fair.

You say it isnt fair, but you signed the original forms - you agreed to all the terms.
What wouldnt be fair is if after having agreed to terms YOU then seek to break them. That would be the moral equivolent of agreeing your salary with your boss and him then paying you less - unfair.

Just because you now represent less risk by having cleaned up your credit (credit score increases the longer you hold a mortgage is 1 example), doesnt entitle you to exert a cost on the very lender that helped you in your time of need.