Exit feeS

Safenath

Hi there,

I know theres a huge thread on exit fees but I cant find an answer to my question anywhere. Basically I had a 3 year mortgage and Ive sold my house with 2 months left. Im not buying a new place so want to pay my interest only mortgage off completely.

The early payment charges are £2000 but my monthly mortgage is only £300. Obviously paying £300 for 2 months is a lot better than paying £2000 in charges. Do i have to pay my mortgage back right away once the house is sold or can I hang on to the money for 2 months, pay my normal mortgage repayments and then pay back once early exit fees no longer apply?

Thanks in advance!

Thrugelmir

The mortgage will be redeemed when the sale is completed. So you be liable for the ERC if the product term hasn't ended.

Slow the sale process down..........

Safenath

Thanks for the quick reply! Unfortunately I can't. Part of the agreement in the sale was that if the process can move as fast as possible. Didnt expect a £2000 fee. I probably wont be able to pay my full mortgage back taking this into account and I dont have any savings to fall back on.

Do you know what will happen if say the sale goes ahead, I cant afford to repay the full mortgage plus solicitors fees plus estate agent fees plus early exit fee! I was pretty much breaking even before the exit fee.

hcb42

the sale wont be able to go ahead...you will need the money at the solicitors I would think. this is the solicitors responsibility to ensure it happens (and s/he will want their fee)

dunstonh

Didnt expect a £2000 fee.

How did you miss that? It's on the offer letter, the key feature illustration and most lenders now put it on their statements. Plus, when you enquired about the mortgage redemption figures, they normally make you aware of it then (assuming you did enquire).

Do you know what will happen if say the sale goes ahead, I cant afford to repay the full mortgage plus solicitors fees plus estate agent fees plus early exit fee! I was pretty much breaking even before the exit fee

The sale cant happen if you cannot clear the mortgage in full, the purchase will fall through and you may find the others in the chain take action against you (unusual but possible).

DVardysShadow

There is something wrong with ERC exceeding the payments left until the end of the ERC period. Personally, I think that the excess of an ERC over payments to end of period is a penalty charge and it would not stand in court. But it would need a test case - or some enlightened lender to clarify.

dunstonh

DVardysShadow wrote: »

There is something wrong with ERC exceeding the payments left until the end of the ERC period. Personally, I think that the excess of an ERC over payments to end of period is a penalty charge and it would not stand in court. But it would need a test case - or some enlightened lender to clarify.

Its a problem with any charge which is based on a line in the sand. However, many lenders do reduce the ERC each year. However, annually is not going to help the OP.

Some lenders would be sympathetic to a request to waive it if its just a few months away. It would be worth asking.