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

MarkyMarkD

No, fixed rates will not go up just because the BoE base rate goes up. Fixed rates are based on the market's expectation of future rates, not what they are right now.

Indeed, if BoE base rate goes up more slowly than expected - but still goes up - fixed rates could fall.

I doubt that they will get much cheaper than they were a few months ago, for quite a few years, though.

KRAMAGE

Wonder if anyone can advise me? I am in the final few months of a mortgage deal which ends 31st October 2009.

I took out the mortgage with "The Mortgage Business" (an offshoot of HBOS) through a local broker after I put my property up for sale as the mortgage was portable to another property.

I have now accepted an offer on my property however "TMB" no longer offer the facility to port the mortgage and are saying that I will still have to pay the penalties on the mortgage in excess of £5000. I am less than happy to pay these fees as it is my opinion that they have broken the contract not me.

_Andy_

They haven't broken any contract as portability is never guaranteed.

lazysaver_2

Does anyone here have experience of ERC's and Natwest?

I have received a mortgage offer document which basically says (I don't have the actual wording with me) that you can avoid some or all the ERC's on a fixed deal if you move house and take out further borrowing, and take out another deal.

I read this as being quite a nice get out if fixed rates do fall considerably as I am hoping to move next year and up the mortgage considerably.

Thanks.

MarkyMarkD

I doubt you are reading it correctly. Does it not mean that you would avoid the ERCs if you ported the entire mortgage, and that you could ALSO top up with further borrowing on a new deal rate?

lazysaver_2

Maybe, but it clearly refers to paying off the old mortgage. This is what its says:

"If you move house you can transfer this mortgage to another property subject to the following terms and conditions.

Where an erc becomes payable because you are paying off the mortgage in full, we will refund all or part of this charge if:

a) you complete a new mortgage on a different property with us at the same time you pay off this mortgage or within three months and

b) the new mortgage is on the same terms as your present mortgage (ignoring any difference in the amount lent under the new mortgage)

We will refund the erc in full if the new mortgage is on the same terms as this mortgage and is for the same amount or more than the amount required to redeem this mortgage."

When you move house, doesn't the new mortgage pay off the old one?

sarmia

My bro in law had this with Northern rock couple of years ago. He sold his house with erc of £5k and bought another 3 months later. The erc was refunded to his bank account once the sale had been completed.

MarkyMarkD

lazysaver wrote: »

Maybe, but it clearly refers to paying off the old mortgage. This is what its says:

"If you move house you can transfer this mortgage to another property subject to the following terms and conditions.

Where an erc becomes payable because you are paying off the mortgage in full, we will refund all or part of this charge if:

a) you complete a new mortgage on a different property with us at the same time you pay off this mortgage or within three months and

b) the new mortgage is on the same terms as your present mortgage (ignoring any difference in the amount lent under the new mortgage)

We will refund the erc in full if the new mortgage is on the same terms as this mortgage and is for the same amount or more than the amount required to redeem this mortgage."

When you move house, doesn't the new mortgage pay off the old one?

I don't understand the point you are making.

You have to transfer the whole value of the existing mortage to the new property, in order to avoid paying an ERC.

You are suggesting that you can use moving house as a means to get out of your existing fixed rate (or at least, that's how I read your earlier post). But you can't - you have to take the existing rate, for the existing value, to the new property, or you'll pay an ERC on the part that you repay. This is the same as almost all lenders' ERC terms.

lazysaver_2

I would be transferring the whole value of the existing mortage to the new property - and adding a lot more.

But what stops you selling your property and paying off the mortgage, then buying a new property and taking out a new mortgage within 3 months (as per sarmia's post)?

MarkyMarkD

I agree with what sarnia said. But I still don't see why you are saying that this gives you a get-out on fixed rates - it doesn't. You would have to take the existing fixed rate with you, to get the ERC back when the new mortgage completed.