Early redemption fees

song_of_calliope

We are moving for my job and are planning on selling our house and renting for a while in our new location. But I've just been reading on another thread about early redemption fees which I hadn't even considered until now. We have a Nationwide mortgage and we owe about £75,000 on this. We unfortunately recently refinanced and got a three year fixed mortgage. So if I understand correctly we are now going to have to pay about 4% in fees so £3,000 when we sell our house.

Is this correct. And is there anyway around it? Forgive my ignorance but this is the first house I've ever owned. What with this fee, the loss in value plus the repairs we've had to pay for it has just been a nightmare and I'd have been better off just flushing my life savings down the drain - less hassle at least.

Anyway, rant over, thank you for any advice you can give me.

_Andy_

Yes it is correct and no there isn't

kingstreet

Did you get a key facts illustration for the mortgage you took out when you bought the property?

Did you get a mortgage offer?

Did you get a key facts illustration when you recently took a customer retention product from your existing lender?

In section 10 of the KFIs and the offer, there is a paragraph headed "What Happens If You Don't Want This Mortgage Any More?" and in it, it sets out the costs and fees involved in repaying the mortgage early. These are expressed both as a percentage of what you've borrowed and a maximum figure in £.

Did you receive these documents?

no1catman

Maybe, you pay 99% - leaving a small anount left which may enable you to 'freeze it' just leave you an annual storage fee, till the term is up.

G_M

song_of_calliope wrote: »

....and got a three year fixed mortgage. So if I understand correctly we are now going to have to pay about 4% in fees so £3,000 when we sell our house.

Rather than take their standard mortgage rate, you chose a 'special deal'. It gives you security for 3 years in knowing exactly what your payments will be. And guarantees that if the economy changes (and rates rise) your mortgage will stay the same (and Nationwide will take the financial hit!)

In return, you promised to stay with them for that period, OR to pay a penalty - the Early Redemption Fee.

Locking yourself in is only a good move if, amongst other considerations, you ar sure you will be there for the period required.

G_M

no1catman wrote: »

Maybe, you pay 99% - leaving a small anount left which may enable you to 'freeze it' just leave you an annual storage fee, till the term is up.

OP wants to sell their property. You cannot leave a mortgage Charge on a property when you sell.

the buyer would not be best pleased!

GDB2222

Basically, as Kingstreet says, was there something wrong with the documentation you were given? Otherwise, you're stuck with the early repayment charge.

I suppose it's worth asking who advised you to take out this refinancing deal? Did they discuss this aspect with you and what your plans were?

Poppy9

If you are buying another house and will buy and sell at same time then speak to your lender. They might let you transfer your mortgage to the new property and you just incur valuation fees.

The percentage you repay for early redemption often reduces during the fixed period so might be 5% in first year, 4% second year etc. or a fixed amount.

song_of_calliope

Thanks, all. The stupidest part about the whole thing is that we knew we would be moving away but didn't realise the early repayment fee would apply to us. In fact, I signed my contract for my new job before signing up for the new mortgage deal! We thought it was only if we finished paying off the mortgage early ourselves if that makes sense rather than paying it by selling the house. Yes we feel really dumb about this so please no judgement as it won't be harsher than what we feel ourselves.

We will check all the documentation we received to see whether this was explained to us properly. We'll also call Nationwide and ask them about this, but we're still working on getting them to reimburse us for an insurance claim (we have our insurance through them as well) so we don't want to tell them we're moving just yet.

Perhaps we'll be able to find something to buy in our new location just after we sell our house but we weren't wanting to rush into a new house purchase because we wanted to make sure we got it right.

Many thanks to all who responded and any further ideas would be greatly appreciated.

mrsmchapman

Hi, I to didn't realise about the early charge until I recently checked as we had decided to rent should we not find a home to buy, so your not alone. As others gave said our fee was on our key facts sheet. Sadly it's a charge you cannot get out of. We are with Natwest who had said that should we sell and find another property and complete in 3 months they would return the early charge back to us if we used them again. It's a lot of money to lose in the short term.

GDB2222

song_of_calliope wrote: »

Thanks, all. The stupidest part about the whole thing is that we knew we would be moving away but didn't realise the early repayment fee would apply to us. In fact, I signed my contract for my new job before signing up for the new mortgage deal! We thought it was only if we finished paying off the mortgage early ourselves if that makes sense rather than paying it by selling the house. Yes we feel really dumb about this so please no judgement as it won't be harsher than what we feel ourselves.

We will check all the documentation we received to see whether this was explained to us properly. We'll also call Nationwide and ask them about this, but we're still working on getting them to reimburse us for an insurance claim (we have our insurance through them as well) so we don't want to tell them we're moving just yet.

Perhaps we'll be able to find something to buy in our new location just after we sell our house but we weren't wanting to rush into a new house purchase because we wanted to make sure we got it right.

Many thanks to all who responded and any further ideas would be greatly appreciated.

Did Nationwide provide you with advice, or just factual information?