Accord Mortgages- Early Repayment Charge Advise?

Spurs1982

Hi all, just looking for a bit of advice or your thoughts on our current situation if poss?

We are purchasing a new build property which will be ready mid November. We have sold our current property, however we are using the Help to Buy scheme so will unfortunately have to change mortgage lenders as Accord are not on the scheme. My current fixed term ends on 31st Dec, however my mortgage payments are taken on 2nd of each month. As it stands, our ERC would be 3% of the balance left, so around £3k. I totally understand why these charges are imposed, however I do think its a little steep for just one month. Our builders have advised that the latest we can complete would be 23rd Dec, which still is outside of the 31st Dec date, however, our last payment of that term would have been paid on 2nd Dec.

My question is- would it be unreasonable to fight for this charge to be reduced if we have made our final payment on the mortgage term, and would you see this as the term settled if the final payment had been made? Would this be deemed a disproportionate cost because of the time scales, or are we just doomed to pay this fee for the sake of 2 weeks?
Any advise/thoughts would be appreciated!

ValHaller

I would be thinking of offering the builder £1500 extra for completion on 2nd Jan

GMS

Why the urgency to complete on the purchase?

Tell the builders you cant make it, especially with it being Christmas. Ask your solicitor to slow it down.

Probably 5 working days between 3k and £0 for you in terms of ERC.

Lender issued the terms and you accepted. Appreciate what you say regards being only a week but really needs to be taken up with builder.

Have you paid any non refundable fees to the builder?

Leo2020

Similar situation myself. Mortgage runs out in December 2013 but house should be ready late September/early October. I'm with Woolwich but I need to use the Help to Buy scheme to buy a new home as I can't afford to move with out it.

The call centre is in India and all they do is repeat what the fee is when asked if the fee could be reduced.

I sent them an email which has been ignored - it's been over a week since I sent it. I sent a reminder email but still nothing.

I will be sending a letter soon.

In the email I quoted their own website which states that an early repayment fee "is designed to compensate the lender for the interest that would've been paid had the mortgage run the full term."

The £2000+ fee they want to charge goes way beyond this. I don't mind paying the remaining interest I owe and a reasonable admin fee but upwards of £2000 is taking the pee.

dunstonh

The £2000+ fee they want to charge goes way beyond this. I don't mind paying the remaining interest I owe and a reasonable admin fee but upwards of £2000 is taking the pee.

ERCs are considered fair and justifiable. Without them, we wouldnt have the special deals you see available.

Perhaps you should take more care in the contracts you sign in future if you dont like it.

GMS

The fact is a contract has been signed and now you do not want to stick to it.

Had the lender written to you after a month of the mortgage and suggested that they no longer wish to abide by the terms and would kindly ask you to allow them to triple the interest rate what would your reaction be?

Leo2020

dunstonh wrote: »

ERCs are considered fair and justifiable. Without them, we wouldnt have the special deals you see available.

Perhaps you should take more care in the contracts you sign in future if you dont like it.

Ha ha. Of course I read it. I'm not a numpty as you are trying to make out. When I signed it I had no intention of moving so I knew I wouldn't be paying the fee but things have changed.

I don't think it is daft to at least ask the bank to reduce the fee, but maybe you do? Nothing ventured, nothing gained and all that.

Leo2020

GMS wrote: »

The fact is a contract has been signed and now you do not want to stick to it.

Had the lender written to you after a month of the mortgage and suggested that they no longer wish to abide by the terms and would kindly ask you to allow them to triple the interest rate what would your reaction be?

I am aware it is contract. But surely I can ask the bank right? What is the worse they are going to do?

Leo2020

Maybe dunstonh and GMS could explain something to me.

My understanding is that any charge has to be a genuine pre-estimate of loss. So how does that work? How do they work out that the loss to them is the same whether I pull out a month into the agreement or a few months before the end. - This is a genuine question, I would like to understand more.

Thrugelmir

Leo2020 wrote: »

Maybe dunstonh and GMS could explain something to me.

My understanding is that any charge has to be a genuine pre-estimate of loss. So how does that work? How do they work out that the loss to them is the same whether I pull out a month into the agreement or a few months before the end. - This is a genuine question, I would like to understand more.

Lenders fund fixed term products by securing matching funds for the same duration, i.e. back to back the transactions. Thereby guaranteeing themselves a return. So if they allowed you to terminate early they still have a liability for the funds that they borrowed.

You need to put aside the fact it's only one month. The principle at issue is the contractual term itself. Once they allow any variation, then the floodgates would open to a multitude of other circumstances.