Avoiding Early Settlement Fee

abandonded

I have a mortgage with northern Rock which has about 5 years to run. I am now in a position to pay off the £23000 balance, but if I do so early, there is a £1500 early settlement fee. A friend has suggested that if I leave a balance of just £1 in the account for the remaining period I can avoid the £1500. Any help would be appreciated.

dimbo61

We dont know what if any ERC,s you would have to pay ! are you in a fixed rate deal at the moment ?
What rate are you paying ? What interest rate are you getting from your savings ? Do you have other savings for emergencies ?

abandonded

dimbo61 wrote: »

We dont know what if any ERC,s you would have to pay..............£1500 (in contract).

are you in a fixed rate deal at the moment?..........yes.

What rate are you paying?............6.09%.

What interest rate are you getting from your savings?..........varies from just over !% to ISA at 3%.

Do you have other savings for emergencies?........yes.

Hi and thanks for your reply. It's the £1500 in the contract that I would like to avoid if possible.

beecher2

Phone them up and get an answer direct from them. Ask them how much you can overpay without penalty.

abandonded

abandonded wrote: »

I have a mortgage with northern Rock which has about 5 years to run. I am now in a position to pay off the £23000 balance, but if I do so early, there is a £1500 early settlement fee. A friend has suggested that if I leave a balance of just £1 in the account for the remaining period I can avoid the £1500. Any help would be appreciated.

I have just phoned Northern Rock and they have confirmed that if I leave a minimum of £1 in the account, they will waive the £1500 ERC.:beer::beer:

dunstonh

abandonded wrote: »

I have just phoned Northern Rock and they have confirmed that if I leave a minimum of £1 in the account, they will waive the £1500 ERC.:beer::beer:

I would get that in writing before you do it as that is not how ERCs work.

What you describe sounds like the redemption charge would be avoided. Not the early repayment charge.

Thrugelmir

dunstonh wrote: »

I would get that in writing before you do it as that is not how ERCs work.

Northern Rock allow unlimited overpayments on their flexible mortgages providing the mortgage isn't redeemed in full.

NR is still state owned so I'm sure that they are more than happy to see the mortgage book contract.

kingstreet

Are we talking about Northern Rock or NRAM?

abandonded

dunstonh wrote: »

I would get that in writing before you do it as that is not how ERCs work.

What you describe sounds like the redemption charge would be avoided. Not the early repayment charge.

Re a later reply, we are talking about Northern Rock. I have just been on to NR again, speaking to a supervisor who informs me that as far as they are concerned, RCs and ERCs are one and the same thing. She also confirmed that if I leave £1 in the account the ERC of £1500 need not be repaid. This £1 has to remain in the account for 12 months for the ERC to be completely withdrawn. After this time I can sever all contact with NR for the much smaller fee of £250.