Partial repayment of mortgage

Tired07

Earlier this year I remortgaged with a new provider to pay for a loft conversion. At that stage I'd already discussed my plans with my neighbour who seemed fine with it. Unfortunately on service of the Party Wall notice, they began to object and it's since turned into an expensive nightmare involving a surveyor. As things stand I'm likely to have to fork out for another surveyor (possibly two) under the Party Wall Act. It's now got to the stage where I'm wondering if I can be bothered continuing with the process and having a neighbour who won't talk to me.

So, I'm thinking of calling my lender and seeing if they'll allow me to repay the additional money I borrowed to cover the loft conversion. I know I'm entitled to repay an extra 10% per annum, but I'd be looking to repay 20%.

Anybody ever tried similar? Views on how they may react to my request (other than laughing)?

Samoht1977

You could pay the 20% but will incur an early repayment fee for the 2nd 10%. This may be as much as 5% depending on the lender. How much do u owe on the mortgage?

Tired07

I owe £155k (5 year fixed began in March). I'd be looking to repay the extra £30k I took on for the work.

Samoht1977

Do u know what percentage fee your early repayment charge is?

Samoht1977

Based on a 5% ERC you would be looking at a fee of £750 to pay off the full £30,000.

May be worth it to prevent falling out with the neighbours.

Hope this is helpful.

Tired07

Yeah, it's 5% (£7k-ish). Not worth it, but wondered if they'd take pity on me!

Appreciate I could pay back 10% this year and next, which wouldn't be far off £30k.

Tired07

Ah, thanks. I hadn't realised it would be 5% on amount paid back, rather than full amount of loan.

Will my monthly repayments reduce accordingly or do they stay the same?

Samoht1977

Hi

Your monthly payments will decrease accordingly.

Glad to be of help.

McKneff

Wouldnt it be easier/cheaper to try to work things out with your neighbour.

Tired07

It would, but they're impossible and beginning to make irrational statements which i wont go into on here. We can force the issue legally, but I'll be paying more surveyor fees and a lot of stress.

Just giving some thoughts to my options.

Jimbo1976

Check the precise figure for the early repayment charge

If you can pay off 10% pa with no penalty, then assuming your ERC is 5% then you would only pay the 5% ERC on the amount you pay above the 10% ERC free hence the (£750 figure above)

Just out of curiousity, what is your fixed rate? If your ERC is 5% and your interest rate is 4%, then you would probably be better off saving the part you would pay an ERC on in a savings account and then repaying it once its ERC free.

You should also check what the period of ERC is? is it linked to a specific date eg 31/7/2013 or is it by calendar year as lenders do tend to vary