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

boundarybob

I think I am in the right place!
I have a fixed rate mortgage with Chelsea and the fixed period ends January. I am going travelling for 6 months from September and intend to let out the house to pay the mortgage. I told Chelsea and they say I have to change to a buy to let mortgage even though it is only 6 months and I will be reverting to a normal mortgage on my return in March
has anyone had experience of getting out of this. The total cost of two changes will be around £800.
Thanks
Bobw

MarkyMarkD

You bought your house with a residential mortgage. Chelsea are not obliged to allow you to let at all. They don't even have to offer you a BTL mortgage if they don't want to - they can simply deny your request to let and repossess your property at the extreme!

I'm surprised that you say the cost will only be £800 if you are on a fixed rate and presumably tied in with an ERC?

boundarybob

Thanks MarkyMarkD
You are correct but I am just trying to find a way out as there is only 3 months until I can redeem with no cost ( except for the normal small fees). I was hoping there may be some descretion or maybe a way of remortgagin to avoid being hit just because I need to travel for a short while and then back to a normal mortgage.
Boundary bob

MarkyMarkD

There's certainly no way of remortgaging when you are tied in, without paying the ERC.

If your lender say no, there's no reason why they should be required to say yes.

redemption_2

New to the forum so sorry if this has already been asked..BUT could i please ask advice about my early redemption charges. I took a mortgage in May 2006 for a 2year deal and ERC was at the time £5000. Now im looking to sell the property and with 9-10 months left on the mortgage deal they tell me my charge will be £6881. They charge 14months interest regardless of how close to the end of the deal you are, so in effect the longer you stay with this company the more they charge you to exit! I know its not fair but is it legal?

dunstonh

I know its not fair but is it legal?

Why is it not fair?

You signed the contract knowing the terms. Your solicitor would have pointed them out to you before signing.

They are fair, valid and legal.

redemption_2

Thankyou dunstonh for your quick reply and I will of course accept that the charge is valid and legal.However I cannot accept that repaying a company more money than we owe in mortgage payments is fair and at no point did my solicitor advise me of such, it was difficult enough to get to speak to her at all.Im sure that if questions asked at the time were answered as quickly as you have today, there would be no need for people like me to use this site and no need for the site anyway.Property buying in England is and I think always will be unnecessarily frustrating and confusing. Thanks again

dunstonh

However I cannot accept that repaying a company more money than we owe in mortgage payments is fair

You took on a financial commitment and went with a deal that offered you special terms compared to the standard mortgage. A deal that the bank is unlikely to profit on from the rate alone. Hence the tie in.

at no point did my solicitor advise me of such, it was difficult enough to get to speak to her at all

You may have grounds against the solicitor as they are meant to point out things like that before you sign the contract.

At the end of the day, you agreed these charges before you started. They are printed on the contract. Mortgages are a retail product and they are part of the cost.

redemption_2

[quote=dunstonh

At the end of the day, you agreed these charges before you started. They are printed on the contract.

OOuch all sounds a bit loan sharkie to me !...but once again i got the answer to my question and thankyou !

MarkyMarkD

How is it "a bit loan sharkie"? You are sent an offer of mortgage by the lender which is also copied in to your solicitor. It will have clearly stated the amount of any ERC.

Your mortgage started in 2006 which means that mortgage regulation applied to it. That means that you also were given a clear KFI in a statutory format which very clearly states the amount of any ERC and the basis for calculating it.

If you can't read a very simply written (albeit 5 page) KFI, you shouldn't be buying a mortgage.