ERCs- Early Repayment Charges - early exit fees. (merged).

MarkyMarkD

dunstonh wrote: »

You will be charged. The lenders get the deal financed by investors and pay penalties themselves if you come off the deal. This is why they charge you. The only incentive for them is if getting rid of you altogether is better option for their finances (e.g. Mortgage express)

Dunston, you don't seem to be on form today.

The correct answer to the OP here is that the lender will allow them to switch from repayment to interest only (in most cases); they may levy a small administration fee but they certainly won't charge the ERC.

MarkyMarkD

FT29 wrote: »

Hi, I came to the end of my 3.99% fixed rate mortgage in June 2008 and, with the climbing interest rate, took a 3 year fixed at the best rate I could reasonably get at the time which was 6.29%. Obviously this is a bit painful now and hindsight is a wonderful thing, but with the 3% early redemption penalty and £150 release fees I'm looking at £5000+ costs to "buy myself out" now.

The mortgage is approx 120,500 capital, 44,000 interest-only, with just over 14 years to go.

Doing some sums using First Direct's Base Rate Tracker product as a comparison it appears that I will not be better off over the remaining 2.5 years on the reduced rate taking into consideration remortgaging costs on top, despite saving approx. £225 per month on the mortgage payment.

Do I sit tight and do some recalculations in a year's time, grin and bear it for the remaining 2.5 years on 6.29% and vow to check early redemption penalties much more closely in the future or is it worth pursuing a remortgage now? I'm thinking I'll recalculate in a year's time.

If you can afford the repayments, then you are right to stick tight. There's no point switching for the sake of it, if overall you will be worse off.

It's also quite likely that you'll be able to get a tracker at a lower margin to BBR by 2.5 years' time, at which stage base rates will likely be far higher than today.

Polly_Pod

MarkyMarkD wrote: »

As the original mortgage was taken out 7 years ago, it won't be regulated and the product switch won't have a KFI.

But the borrower should have been given details of the new product, and any ERC applicable, and should have signed up to these revised terms.

Ask the lender for a copy of the document you signed, agreeing to the switch and the ERC.

If this document exists, as Dunstonh says, you will have to pay the ERC.

Thanks for your reply, it may have seemed a silly question to ask but as this is the first house we've had a mortgage on we not fully clued up on the implications of selling. The only advisor we had was at the lenders because we were already with them & just moved to a different product (which they also charged up for to the tune of £395 - wish we hadn't bothered now).

If there's nothing to be done - there's nothing to be done but it's always worth asking & as it's so frustrating that we have to pay 3% & when the interest rates went up we had an instruction letter with days now they have gone down its like trying to get blood from a stone to get information & even worse for the reduction.

What is a KFI?

No option about not going - sunshine always makes things seem better:rotfl:

dunstonh

MarkyMarkD wrote: »

Dunston, you don't seem to be on form today.

The correct answer to the OP here is that the lender will allow them to switch from repayment to interest only (in most cases); they may levy a small administration fee but they certainly won't charge the ERC.

You are right. For some strange reason, i read it as changing lender at the same time. Hence my response. Sorry.

MarkyMarkD

KFI - Key Facts Illustration, something which lenders have had to issue in a consistent format when selling a mortgage, since mortgage regulation was introduced. Doesn't apply to Polly_Pod's mortgage which was sold BEFORE mortgage regulation.

Jakie123Jakie123

I am about two years through a three year fixed mortgage deal (5.55%) with Nottingham Building Society and have a ERC of about 3k. My girlfriend and I considering breaking up and we wonderered whether if one of use bought a new house we could transfer this mortgage over to a different property (thus avoiding the ERC) or if we could alter the mortgage to allow us to rent the property out (again in an attempt to avoid the ERC). Is there any other possible solution?

Sorry if these are basic or stupid questions but i dont really understand mortgages all that well.

Thanks in advance

MarkyMarkD

Most lenders will allow what you suggest - i.e. porting the mortgage to a new property in ONE of your names. Equally well - if either of you can afford it - you could buy out the other partner (making a "transfer of equity" on the mortgage) and then the ERC would not apply.

You would likely need to be borrowing the same amount, or might be able to pay a partial ERC on the reduction in borrowing.

Regarding letting the property, many lenders will allow you to let for a short time - like a year - on a residential mortgage. Sometimes they won't charge anything, sometimes they'll charge a small fee, sometimes they'll make you pay the ERC and switch to a "buy-to-let" mortgage product.

All you can do is ask.

loveleelaidee

i am a customer of abbey mortgage. my fixed rate ended last august. i had borowed extra money on secured basis with ge money home lending to extend the house, that complete, i have now tried to change my mortgage to abbey flexible mortgage. i signed up to this in october and was accepted however had to change the secured loan from ge money to abbey as a home owner loan in order the flexible team would authorise the new product. i am still waiting to be placed on this flexible however ge are still showing as having a second charge over my property. i have informed all them on no less then 8 occasions since i completed the transaction, with payment in full by abbey, directly to ge. i am now paying around 2.5% more in mortgage payments each month than the flexible as they have kept me on the standard variable and refuse to change this until ge remove their "charge" over my property. ge have sent them a letter explaining they no longer have an interest in my property due to the redemption paid by abbey. land registry state the charge is in ge money's name. what can i do now? am i entitled to some form of compensation for the money i'm "throwing" away every month while i wait, help i really need help. btw when i repaid ge they charged me an early settlement figure, unknown to me this was written into the very small print on the back page of the agreement. there was no mention of a 4 year tie in where the loan details were to be signed. I requested the settlement figure and i was given the amount including esf. i requested why this was added and they said i needed to give one months ntice to avoid this. i did so verbally and in writing and still got charged then they appeared with no matter how much notice i signed the contract for 4 year tie in. i had received numerous letters of changes to tems and conditions of loan the most recent few stating one month notice of redemption to avoid erf however this was not the case. can anyone out there explain this too me or help me get this money returned or mortgage set up .... sorry if its long please feel free to move it as i don't know how to make a new thread.

L xx

MarkyMarkD

I do have to wonder why on earth you took out the secured loan with GE in the first place, when it would have been more straightforward and cheaper to get a further advance from Abbey in the first place.

Did you not have a Key Facts Illustration from GE when you took out the mortgage, which would have had wording in a standardised format fully explaining the Early Repayment Charge? Or was this secured loan not a regulated loan? (Sorry, I can't remember if they are or not).

loveleelaidee

well, took out the loan because Abbey wouldn't let us have anymore. They valued it very low when house prices here were rocketing.. GE valued it a good 100000 higher which is what the houses similar to ours were going for then.The loan itself was provided by igroup on behalf of ge and I'm not sure if they are regulated. I don't think they are. Does that mean we have no come back? there was no key facts though they have sent me out a copy of the agreement. there is no mention about early repayment until you turn over the page and read the very small print. There is nothing on the page you sign at all. Also, they kept sending me information about changes to the terms and conditions, ie erc equal to one month interest with 30 days notice. it's on lots of their correspondance. Does it count for me and not for them?