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

MarkyMarkD

No, they wouldn't be unreasonable. And nor would they likely accept. The penalty is 6 months until the final day, not a decreasing amount depending how close you get.

And they WOULD be losing money if you pay 3 months' interest when you contractually should pay 6. How do you work out that it isn't a loss?

And, by the way, why on earth do you want to redeem it with 3 months to go? Can you not port it to your new property, or are you selling up and not buying another house?

If your existing mortgage reverts to an attractive rate after the end of the fix, you might be ill-advised NOT to port it, if you are indeed moving house and considering borrowing money elsewhere.

laratigger

If I stay till the end they get three months interest, which is all they expected to get. They are not losing money if I leave early and pay that 3 months. They will get in effect a three months interest bonus for getting their money back early, and thus being able to lend it out at probably a much better return That's why I thinks its unfair. I am not costing them anything.
We have a buyer now. We may not get one in three months time, this guy doesn't want to wait. A bird in the hand etc etc. We aren't buying another place as this a buy to let, which never made money, that after 7 years gone horribly wrong, leaving us with a ruined house which we're selling to a builder at just over what we paid for it 7 years ago. We've learnt our lesson and we're just glad to get rid of it.
On top of this the ERC really stings.

MarkyMarkD

They didn't only expect to get three months' interest. They offered you a good deal for a fixed period of time in the expectation you'd stay with them after the good rate.

They make hardly any money if people leave the day after the ERC expires.

The ERC might "sting" but it doesn't make it unjustifiable.

I don't know of any lender who would accept half of the contractual ERC in the circumstances you describe.

Sammyj5664

Can anyone help. We're about to move house - downsizing to ensure that we don't get into mortgage arrears as I was made redundant whilst on maternity leave!
We currently have a mortgage of £240k with our current lender and require about £195k for the new house. Our lender has told us they are unwilling to remortgage us so we cannot port our mortgage over as we had planned to do. We're now looking at a £3700 ERC because they are refusing to remortgage. Is there anything we can do?

dunstonh

Sammyj5664 wrote: »

Can anyone help. We're about to move house - downsizing to ensure that we don't get into mortgage arrears as I was made redundant whilst on maternity leave!
We currently have a mortgage of £240k with our current lender and require about £195k for the new house. Our lender has told us they are unwilling to remortgage us so we cannot port our mortgage over as we had planned to do. We're now looking at a £3700 ERC because they are refusing to remortgage. Is there anything we can do?

pay it or wait until its no longer charged

MarkyMarkD

Or reduce the amount you are borrowing on the new property, so that they WILL advance it to you.

If the problem is that you now only have one income, is it really sensible to be borrowing £195k?

sarmia

Been thinking about this for weeks and now have an appt on Wednesday with HSBC. Current mortgage £108 (house worth £160/£165k).Current CG fixed 4.99 til Feb 2011.

i'm a worried debating getting out £2k and fixing for 7 years with HSBC @4.89 with a £999 fee. Worried incase house prices crash more will have less LTV when its up and also with job security and my oh overtime is stopped etc. We can easily afford the mortgage without it but uncase lenders tighten up. If I wait til Feb 10 ERC will go down til £1k.

Is it worth swopping and riding out or biting the bullet paying the extra and not having to worry until 2016?

This is doing my head. I will add that have always been on fixed like knowing what payments are so likely when I do renew it will be a fixed anyway.
Thank you.

MarkyMarkD

I wouldn't personally think it's worth paying £2k to get out of what is a relatively reasonable fixed rate.

You would be paying around £3k overall in exchange for a 0.10% reduction in currently rate (which is worth about £100 a year off your mortgage interest cost) and to fix for an extra 5 1/2 years at 4.89%.

You must really believe that fixed rates will rise a lot, to make that equation worthwhile. And whilst shorter-term ones may well do, I don't see 7 year rates increasing by a huge amount by February 2011.

But then, what do I know?

sarmia

Thanks, I see that a 5 yr fixed is the same as what we are paying currently anyway.

Do you think as soon as the BOE goes up fixed rates will too? Is there much chance of the fixes reverting too what they were a couple of weeks ago?

dunstonh

Do you think as soon as the BOE goes up fixed rates will too? Is there much chance of the fixes reverting too what they were a couple of weeks ago?

Fixed rates are already heading up and will continue to do so on the basis that its believed interest rates will start to rise at the end of this year. Unless that turns out to be wrong, you wont see them return to the lower levels and if anything will continue to rise.