early redemption fee with valid reason

ginjill

Please help...I have a critical illness policy which has paid me the £70000 owed on my mortgage. The problem is im tied in until Feb 2008..They want a fee of over £4000. Is there anyway this can waived due to my special circumstances (im undergoing breast cancer treatment)..The other thing is ive negogiated a payment holiday for the next 6 months until im fit to go back to work...Im being charged interest still and think my mortgage will be a lot more than it is now, and the policy wont cover it..My bank manager, different to mortgage lender says they should waive the early redemption in this situation..Has anyone any advice? Many thanks:mad:

MarkyMarkD

Most lenders will certainly waive redemption penalties in the event of a life insurance payout but there's no legal requirement for them to do so. Similarly there's nothing other than a moral case for them to waive charges in your circumstances.

If push comes to shove, and they refuse to waive the charge, just wait until February 2008 to redeem - you have the cash (from your £70k) to pay the interest in the interim.

Many products with tie-ins allow payments up to a certain amount without penalty - sometimes up to 10% of the loan. If this applies, pay off as much as you can asap as that'll reduce the interest accruing during the tie-in period.

I'm not sure that I would actually use the payment holiday they've granted you - it would be better to make the payments rather than letting the capital balance get out of hand IMHO.

Hope that helps.