Whacking great Early Payment Fee!

Wannabesaver_4

Help!

We are selling our house to use equity to pay off debts BUT phoned mortgage company this morning and found out i have near £5k early payment to make! :eek:

When we were sold this through a broker i am sure we were told the only fee would be £750. So am more than a little shocked to have this amount!

Any ideas (if any) to lower this? Its such a massive amount!

Also very demorallising when you realise you have been paying mortgage for over a year and have £1.84 interest rather than making a dent! :mad:

Going to read agreement tonight but i know Martin recommends not paying the mortgage off in full i.e leaving £50 to avoid paying the admin charge - would this apply to this fee as well??

HELP!

Doozergirl

If you take out a discounted product, the mortgage company needs a guarantee that you are going to pay enough in interest to qualify the discount they give you. That will take the form of a tie-in period which is often around the same term of your discount or fixed rate period. If you redeem the mortgage earlier, you have to effectively re-imburse that discount, plus the £750 admin fee.

I don't think there's any way at all of escaping that fee unless you are able to downsize and take the mortgage with you (asking very nicely as it won't be standard practice I imagine.

With a repayment mortgage, you ALWAY pay very little off the capital on the first few years. There eventually comes a point where it crosses and you're paying more of the capital and less interest.

hearts

If you are buying another house then as said above port the mortgage. If not you will have to pay.

Prudent

It often says somewhere on your mortgage statement what the redemption penalities are. It will also be on the initial terms you got with the offer of mortgage. Check your back paperwork and see if this figure is correct. Otherwise I would advise as above.