Can solicitor delay repaying mortgage to avoid ERC?

Windsorcastle

This is probably a really stupid question but...

My current mortgage deal ends on 30th September, which means if I repay the mortgage on 1st October I will save £1700 ERC. Although I've been desperate for a quick house sale, that just has't happened so I'm weighing up whether to hold out now for a completion on 1st Oct, or whether to just cut my losses and complete asap regardless of the ERC. (It's not a deal-breaking amount of money although it would be very nice!)

If I did complete a week or 2 before then, would it be legal/allowable for my solicitor to delay repaying my lender until after 1st Oct in order to avoid me incurring the penalty? Or is that just a complete no-no? I would only have 1 more mortgage payment left to make in the meantime. Does the lender go by the actual completion date or the date they physically receive the redemption?

I'm assuming there's no way round this but some of you guys might know of a clever loophole...;)

Gary123456790

Hi,

You cannot maintain a mortgage whilst not owning the property. Your solicitor will pay off the mortgage on completion day.

The only way to avoid the ERC is to delay the sale.

Gary.

holly_hobby

I assume you are not porting your current mortgage deal to your new home ?

Assuming not, then to put it simply no, there can be no delay between your solicitor receiving the monies from the purchaser, and they in turn immediately redeeming your mortgage with your current mge lender.

This is because until your mortgage is redeemed, your lender will not remove their charge, which means that your Sol can't confirm free title to your purchasers' solicitor - and we have grid lock !

How to avoid this .... simply schedule completion for 1 Oct when you're out of ERCs.

Hope this helps

Holly

Windsorcastle

Gary123456790 wrote: »

Hi,

You cannot maintain a mortgage whilst not owning the property. Your solicitor will pay off the mortgage on completion day.

The only way to avoid the ERC is to delay the sale.

Gary.

Thanks Gary. I was pretty sure there was no chance but just wanted to check with people who know more than me!

Windsorcastle

holly_hobby wrote: »

I assume you are not porting your current mortgage deal to your new home ?

Assuming not, then to put it simply no, there can be no delay between your solicitor receiving the monies from the purchaser, and they in turn immediately redeeming your mortgage with your current mge lender.

This is because until your mortgage is redeemed, your lender will not remove their charge, which means that your Sol can't confirm free title to your purchasers' solicitor - and we have grid lock !

How to avoid this .... simply schedule completion for 1 Oct when you're out of ERCs.

Hope this helps

Holly

Aha!! I get it now! Thanks Holly for explaining it to me - the whole thing is a mystery to me but that makes perfect sense. I obviously need to just take the hit and complete asap or delay completion until after 1st Oct. Really appreciate you explaining that cos didn't have a clue!

Yorkie1

You need to keep an eye on when the buyer's mortgage offer will expire ...

Windsorcastle

Yorkie1 wrote: »

You need to keep an eye on when the buyer's mortgage offer will expire ...

Thanks Yorkie. The length of the sale is a whole other saga but they have had 14 weeks so far to exchange contracts and still no cigar!!

Windsorcastle

Thanks all. Can I just ask a related question that I'm puzzled about and see if anyone can explain in layman's terms?

I took the 2 year fixed deal out on 1st August 2011 and assumed it would end on 31st July 2013. It was only when I started the selling process I realised that the mortgage product ends on 30th September, a whole 2 months later. Why is that??

I'm not belly-aching about the ECR itself - the paperwork states it clearly and I signed up to it, and wasn't planning to exit early at the time. But why do banks talk about a 2 year or 5 year deal or whatever, when in fact the it's the life of the PRODUCT that matters, not when you take it out? So you could think you were on a 2 year fixed but actually be tied in for 2 years 7 months or something I presume?

Is it just the banks being sneaky to tie people into ECR for a little bit longer than they expect?? If anyone can just clear up my confusion I can stop scratching my head!!

Thrugelmir

In simple terms it would be far too complex to administer multiple mortgage accounts with the same same product but different expiry dates. So the mortgage product is offered for a set period of time or when the available funds are committed. Whichever comes first.

Lenders will have also back to backed the mortgage advances against fixed term borrowed funds themselves.

Lenders in deal in tranches of hundred of millions of pounds to put the scale of the operation in perspective.

Windsorcastle

Thrugelmir wrote: »

In simple terms it would be far too complex to administer multiple mortgage accounts with the same same product but different expiry dates. So the mortgage product is offered for a set period of time or when the available funds are committed. Whichever comes first.

Lenders will have also back to backed the mortgage advances against fixed term borrowed funds themselves.

Lenders in deal in tranches of hundred of millions of pounds to put the scale of the operation in perspective.

Thanks Thrugelmir. You've come to the rescue yet again to explain something in down-to-earth terms I can get my head around. I get it now. Something I will pay much closer attention to in future. You live, you learn!