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

dunstonh

smiddhthediddy wrote: »

Hi guys

Am currently looking to switch to Natwest from RBS to allow me to borrow more at a better rate. Only a few months into a new fixed rate unfortunately (had to take this at the time as was being made redundant!) which means am looking at a hefty penalty. My question is though as I am staying within the same banking group is there a way for this to be contested/waived??

The ERC is not to do with the banking licence but how the deal is financed. If you repay the mortgage deal early then the lender still has to pay the people that financed that deal. It could be savers on fixed term deposits. It could be money market investors. The ERC is to cover the loss.

robertadico

thanks for such a nice post........

Annasp

Hope someone can help! I have sold my house to reduce mortgage paymentsintending to reduce payments by £300 per month. My lender told me that I could borrow up to £70,000 and and as I had a court order for maintenance this could be included. This was concurred by every member of staff I spoke to. A motgage was agreed by underwriters but the seller withdrew, I put in for a mortgage for £2000 more with the same lender
and put an offer on the house. I was told the mortgage amountwas fine and just has to go to the underwriters. They say now I can only borrow substantially less as they will not accept the court order for maintenance as it's for the children, so I can't buy the new house, breaking up a whole chain due to complete in 4 weeks. Can lenders go back on their word like this?

Thrugelmir

Annasp wrote: »

Can lenders go back on their word like this?

Unfortunately yes. Tighter regulations are being imposed on lenders to act in a responsible manner. Which results in even higher hurdles to clear on the part of borrowers.

hyugjbn

i think that is not very suitable for me,

cobbs67

Hi

I had a 3 years fixed rate mortgage with RBS but when that ended 2 years ago I just stayed on the standard variable rate. I am now looking to make overpayments to my mortgage. I notice RBS say that you can make overpayments of 10% a year without penalty. Is this still the same as im not tied into a deal, was hoping to pay off more than 10% ? Also, is there a way to make overpayments to an RBS Mortgage online or does this have to be done by debit card ?

kingstreet

A limitation on overpayments only applies while you are on a special rate - a fix or discount. Once it's ended, you can normally pay off as much as you like.

Talk to the lender about how you go about paying such overpayments. You may need to tell them you wish to see the term drop, not the monthly payments.

cobbs67

kingstreet wrote: »

A limitation on overpayments only applies while you are on a special rate - a fix or discount. Once it's ended, you can normally pay off as much as you like.

Talk to the lender about how you go about paying such overpayments. You may need to tell them you wish to see the term drop, not the monthly payments.

Thanks, I will get in touch with them

JethroUK

citrine wrote: »

hi just a quick question..

i bought a new house not 18mnths ago and wanted to move my mortage with my mortage provider as i was happy with them, i,d only had the mortage with that mortage provider for 12 mnths.

when i spoke with them they refused to give me the mortage as they said they did not mortage to homes on a high street,.. we argued that we are not on a high street but are next to one shop but they wouldnt have it so we had to seek a new mortage provider (either that or not move home)

unfortunately because we had no choice but to change the mortgage provider and we were charged nearly 3k in various charges and clawbacks...

we felt very short-changed and held to ransom by this mortgage provider, is there any thing i can do to reclaim any of the moneys...

Morally wrong (as you've found out)

Its prudent for lending company to charge early settlement fee to recover the administration costs of setting up a new account (£100 - £200 ?) - but they cant use this to write blank cheques to themselves and it will be another case for FSA if banks cant control themselves

It is beyond reason (any normal persons definition of 'reason') for them to

A/ Charge £3000 to fill out a couple forms - if you contest this in court you'll have a guaranteed win, for the reason above

B/ If they are going to attach early settlement fees they can not then go on to dictate restrictions on lending (stop you moving home)

Personally - when i moved my mortgage to First Direct from Alliance & Leics they did 'try' to charge me for early settlement after 10 years - they charged me £370 - I objected in writing to A & L (substance being I was not made aware of early settlement fee at time of the contract) - 2 weeks later got a cheque back

They would not get £3000 out of me, just for moving home early - thats a stone cold fact!!!

JethroUK

MarkyMarkD wrote: »

...Why are they charged?

ERCs are charged because mortgage lenders incur up-front costs setting up mortgage accounts .....

Thanks for the verbatim

but maybe "understand" what you posted might be useful

No lender could justify £3000 for filling out a couple forms to 'a judge'

doesn't matter what they write in the contract - if lenders can not act morally/fairly then the FSA will control them - and with a bit of luck - wipe out these unscrupulous lenders with retrospective suits

just needs a few people to contest them