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

MarkyMarkD

Nottingham BS hasn't received any "taxpaying pounds". Nor has any other building society which continues in business.

Most mortgages are portable. I am very surprised if this does not apply to your Nottingham one. Most people in the situation you describe are actually choosing not to port, because their product rate (and possibly its revert rate) are high - in other words, they are doing it to save money, not because portability isn't an option. If this doesn't apply to you, then fair enough.

Just because you have had a fixed rate for 33 months out of 36 doesn't mean that Nottingham have "covered any costs". They will be committed to paying out at a high fixed rate for the whole 36 months, and they will lose money for the three remaining months if you redeem early - hence the reason for the ERC.

hshen

Hi MarkyMarkD and dunstonh,

I read through the whole thread and there are definitely some interesting posts here.

I am a FTB about to take up a first mortgage on a property I'm buying and I want to check my understanding of the ERC terms are 100% correct.

These are in my KFI:

Section 10. Early repayment charges

Early repayment charges are payable if you repay part or all of this mortgage on or before
30/11/2012. See the table below for details.

3% on or before 30/11/2011
2% on or before 30/11/2012

Section 11. Overpayment

You are free to make lump sum or regular overpayments to this mortgage at any time. For
details of any early repayment charges that may apply please refer to Section 10.

Currently, as a concession, in any 12 month rolling period you may repay up to 10% of the
amount outstanding on your mortgage product(s) without having to pay an early repayment
charge. The lender reserves the right to change or withdraw this concession.

My understand (please correct me if I'm wrong)

1. Lender goes on a 12 month rolling period. Each rolling period is started by the first overpayment.
e.g. if I made my first overpayment in 1/2/2011, I can only overpay 10% between 1/2/2011 - 30/1/2012,
and I have effectively forfeited my overpayment allowance between completion and 1/2/2011.

2. The 10% overpayment allowed in any 12 month rolling period is calculated at the start of the 12 month rolling period.
e.g. if I start my first overpayment in 1/2/2011, and the balance of the loan on 1/2/2011 is 140,000. I can overpay 14,000 in the 12 month rolling period to 30/1/2012.

3. Any overpayment made above the 10%, in a 12month rolling period, before 30/11/2012 will be charged an ERC.

4. The ERC will be charged on the amount over the overpayment allowance in the 12 month rolling period.

e.g. if I only overpaid by lump sum of 24,000 on or before 30/11/2011 and I have an allowance of 14,000, I will be charged 300 which is 3% on the 10,000 over the allowance.

and if I only overpaid by lump sum of 23,000 on or before 30/11/2012 and I have an allowance of 13,000, I will be charged 200 which is 2% on the 10,000 over the allowance.

5. The lender can withdraw the 10% overpayment allowance at any time.
If so how much notice will they need to give me? And how likely in your opinion is this likely to happen between now and 11/2012?

Thanks for you time,

country_mover

Here is a little sum for you to work our MarkyMarkD

3 X £464 =

How much would you have left if you took the total above away from £1530.00

I now know what the D stands for

Carlst

A "One Account" may be the answer. No need to worry about early repayment fees. A one account also helps you work on lowering the amount you borrow month by month so your repayment come down as you go too.

malchish

country_mover wrote: »

You think that I am missing the point?

You need to read the text and understand that I have not complained amount the rate rise just the fact that any costs incurred by offering the fixed rate would have been more than paid for.

The issue is that the money making institutions are happy to take our tax paying pounds when they need help but when there is a clear case for making a reduction they take the faceless stance whilst others suffer.

The current state of the economy (and housing market) does not give the consumer the choice. I have had my house on the market for almost a year and now I am in a position to move I am not going to take the risk of loosing my buyer.

Porting the mortgage is not an option with the product I took out. Do not take such a tone with people who are trying to raise awareness amongst other potential borrowers. If I had the opportunity (33) months ago I would have welcomed the advice

A couple of posters here make it their job to discourage consumers from complaining. Look at how many posts a poster made, and you will work out if they do it for fun or they watch the site all the time.
If you complain to the Ombudsman, you will most likely win.

malchish

hshen wrote: »

Hi MarkyMarkD and dunstonh,

I read through the whole thread and there are definitely some interesting posts here.

I am a FTB about to take up a first mortgage on a property I'm buying and I want to check my understanding of the ERC terms are 100% correct.

These are in my KFI:

Section 10. Early repayment charges

Early repayment charges are payable if you repay part or all of this mortgage on or before
30/11/2012. See the table below for details.

3% on or before 30/11/2011
2% on or before 30/11/2012

Section 11. Overpayment

You are free to make lump sum or regular overpayments to this mortgage at any time. For
details of any early repayment charges that may apply please refer to Section 10.

Currently, as a concession, in any 12 month rolling period you may repay up to 10% of the
amount outstanding on your mortgage product(s) without having to pay an early repayment
charge. The lender reserves the right to change or withdraw this concession.

My understand (please correct me if I'm wrong)

1. Lender goes on a 12 month rolling period. Each rolling period is started by the first overpayment.
e.g. if I made my first overpayment in 1/2/2011, I can only overpay 10% between 1/2/2011 - 30/1/2012,
and I have effectively forfeited my overpayment allowance between completion and 1/2/2011.

2. The 10% overpayment allowed in any 12 month rolling period is calculated at the start of the 12 month rolling period.
e.g. if I start my first overpayment in 1/2/2011, and the balance of the loan on 1/2/2011 is 140,000. I can overpay 14,000 in the 12 month rolling period to 30/1/2012.

3. Any overpayment made above the 10%, in a 12month rolling period, before 30/11/2012 will be charged an ERC.

4. The ERC will be charged on the amount over the overpayment allowance in the 12 month rolling period.

e.g. if I only overpaid by lump sum of 24,000 on or before 30/11/2011 and I have an allowance of 14,000, I will be charged 300 which is 3% on the 10,000 over the allowance.

and if I only overpaid by lump sum of 23,000 on or before 30/11/2012 and I have an allowance of 13,000, I will be charged 200 which is 2% on the 10,000 over the allowance.

5. The lender can withdraw the 10% overpayment allowance at any time.
If so how much notice will they need to give me? And how likely in your opinion is this likely to happen between now and 11/2012?

Thanks for you time,

You did understand correctly... This rolling period trick is very nasty, we once have been nearly caught with it. It makes a consumer believe that they can overpay 10% each year, when in reality they can only do so if they overpay at the very beginning of each year, and with exactly the same sum. Any variations - and a good portion of the entitled overpayment will be forfeited.
Hate this trick.
Halifax tried to play it by telling customers "each year" and then referring to some "rolling year" when you try to overpay.
However, when court forms have been filled, they not only surrendered, but even paid some extra compensation.

stphnstevey

At least something good about RDC's - Nationwide have said that as I have RDC on my product I won't have to pay an increased interest rate if I want to let out the property till after my fixed rate finishes- not all bad

ffnameary

That's a bit misleading, dunstonh.

dunstonh

ffnameary wrote: »

That's a bit misleading, dunstonh.

what is misleading?

user2002

Hi All,

I have been forced to sell my house because of escalating money problems. I moved to Scotland for work but was unable to sell my home in england when I moved. I rented it out for a while but the tennents I got in failed to pay rent and forced me to sell.
The property value has fallen since I originally mortgaged and due to desperation I have had to take a low offer.
I would of just made it, but the early repayment charge has just tiped the cost of selling over the top.
sold for 190k
Mortgage 184200
Charge 5000
Soliciter 700
Estate agent 2800
total 192,700
I have no available funds, everything is maxed, even family.
Would I be able to get assistance from my mortgage company to pay the 2700 I don't have. It's the early payument charge that is killing me.

Any advicee would be great.