Redemption fee help!

MBer13

Hi, I have a fixed rate (5.59%) mortgage with the Woolwich on a ten year basis. I currently have five years left, and am struggling to pay £600 per month interest only. I have spoken to the Woolwich on the phone, and they have said there is no way of changing the terms at all unless I pay the redemption fee (£8000) upfront and buy another of their products. I don't mind staying with them, but don't have the means to pay the redemption fee. Is there any way I can get around this, or should they be more willing to help?

I am left with no option but to downsize, pay the redemption, and shop for another mortgage, which is still going to cost me £8000.

I am a single parent, supporting two university students, and a 9 year old, and I feel that these fees are unreasonable. I know that I signed up to the terms and conditions, but surely the mortgage company don't want to be in a position where they would have to repossess the house?

Any help or advice would be greatly appreciated!

Thrugelmir

If you are unable to afford the mortgage downsize or rent. Banks aren't charities, they are businesses in which people invest.

MBer13

I have been paying the mortgage for 5 years with no problems. I fully appreciate that, and I'm happy to downsize, I just feel that the £8000 is to much; I will have to move to a much smaller house to make it worth it with that fee and the costs of moving. I just thought they would be slightly more accommodating by changing the terms slightly. And to be honest, I know it's cheeky, but I didn't know if there were any loopholes or ways to reduce it. Thanks anyway

opinions4u

I am a single parent, supporting two university students, and a 9 year old, and I feel that these fees are unreasonable. I know that I signed up to the terms and conditions, but surely the mortgage company don't want to be in a position where they would have to repossess the house?

You might think the fees are unreasonable, but you willingly signed up for them when it suited you.

You knew it was a long term commitment.

The lender is also tied in to a wholesale funding arrangement elsewhere which means that they have to carry on paying for your money even if your mortgage no longer exists. Giving away £8,000 would mean a big loss for them as well as having a long term bill to maintain.

You don't have a valid complaint.

Thrugelmir

You will struggle to obtain another interest only mortgage. A new lender will almost certainly require you to either switch to a repayment mortgage or provide evidence of a suitable repayment vehicle.

In the past 5 years we've had some of the lowest mortgage rates post WW2. These aren't going to last. Since Xmas there has been a noticeable upward trend. This trend has some way to go longer term. Personally I'm expecting mortgage rates to rise to a band of 5.5% - 8.5% over the next 5 years. Cheap money days are over.

dunstonh

I just feel that the £8000 is to much

So, why did you agree to it when you bought the mortgage?

It isnt too much. It is in relation to what you borrow and is there because the lender will face penalties from the investors used to fund your mortgage or suffer the costs if they have to fund the difference.

I feel that these fees are unreasonable.

So, again, why did you agree to them? You could have chosen a mortgage without special terms and paid more each month and not have the tie in.

I know that I signed up to the terms and conditions, but surely the mortgage company don't want to be in a position where they would have to repossess the house?

Lenders do not like to repossess. They do it as a last resort. However, if they have to then they have to.

dwsjarcmcd

The only positive suggestion I can make is if you do downsize, you could possibly port part of the current loan to the new property, which would reduce the redemption fee proportionately. But be aware

1. The point above about moving to a repayment loan is very pertinant so you may not save money (but at least you're repaying the mortgage)

2. The Woolwich will underwrite the new mortgage again, so you need to make sure you are eligible for the new loan.

Beyond that, there are no loopholes and you will be expected to pay it