fixed rate deals and penalty clauses

firesidemaid

hi there

i'm after a bit of advice for a family member.

they and their partner have gone their separate ways. they have carried on living in the propeerty paying all the bills and loans etc, but it has become too much and there is no other option but to sell now.

the question is, they would not have gone into a five year fix wanting to end it early, but due to unforseen circumstances there is no other option.

at the moment they are in year 2 and the penalty is £3500, after october into year 3 it will be £2600.

does anyone have any experience of lenders ever reducing this because of difficult circumstances, or they normally stand firm and want their money back.

he has thought about buying another property to keep the deal, but needs a break really from the property market. any other thoughts?

thanks in advance x

david29dpo

He may be able to port the mortgage, or put it on hold for a while. Best to get him to give the lender a quick call.

pcwilkins

sazzacat wrote: »

they and their partner have gone their separate ways. they have carried on living in the propeerty paying all the bills and loans etc, but it has become too much and there is no other option but to sell now.

Why "no other option"? Is the mortgage a joint one? Have they thought about renting the property out until they have a better idea of their future?

the question is, they would not have gone into a five year fix wanting to end it early, but due to unforseen circumstances there is no other option.

Again I doubt that there is "no other option"; perhaps they just haven't thought of the other option yet! Can they really not live together? I really cannot understand how two people can think they love each other enough to take on the responsibility of a home and then find that actually they can't stand each other! Maybe they need to swallow their pride --- after all, they must have like something about their partner or they wouldn't have moved in with them!

at the moment they are in year 2 and the penalty is £3500, after october into year 3 it will be £2600.

How much is the mortgage for? What are the monthly repayments? Who is paying the mortgage, your family member of their "partner" (horrible PC word which I really can't stand --- what happened to boyfriend/girlfriend?)?

How much is the property worth and how much did they pay for it? Could they rent out the property and if so how much for? Is the property value expected to rise --- i.e. where is it and what type of property?

does anyone have any experience of lenders ever reducing this because of difficult circumstances, or they normally stand firm and want their money back.

I doubt it. Nobody would want to end the 5-year fix early unless they had "difficult circumstances". Fact is, your family member and partner made a mistake and the bank certainly shouldn't lose out because of it.

Peter

firesidemaid

thank you - i take everything you say on board.

there is insufficient income now from either to pay all the bills (and loans etc attached).

i won't go into details. all the options have been discussed and ruminated. i just wondered if anyone else had any luck previously negotiating down penalty fees in any particular situation.

dwsjarcmcd

Lenders will not reduce this charge, simply because this would mean they made a loss on the deal. Many lenders will refund all (or part) of this fee if you take out another mortgage with them, provided it completes within about 6 months.

This would also apply if the current mortgage was split between the parties to the current mortgage over different properties.

If there is no other choice then I'm afraid it will need to be paid.