Early Repayment Charges

GaryP_2

I have just paid off my mortgage and been charged what I consider to be an unfair amount for early repayment.

I was tied into a reduced interest mortgage for 3 years and paid it off 5 weeks early. I had no choice as this is when my buyers wanted to move and I didn't want to lose them.

I offered to pay the 2 extra repayments so that they did not lose any money and even offered to pay a penalty of 2 months repayments, but they will not budge.

Then to add insult they then went and took an extra payment from my account 4 days after the mortgage had been repaid and kept it for 10 days.

Has anybody got any advice on what I can do about this ? :mad:

maninthestreet

Was the early repayment charge you paid stated in your mortgage agreement? If so, then there is probably little you can do - you paid the mortgage off early, so the charge becam payable.

GaryP_2

Yes it was, all I am looking for is a little good will from the bank, instead they have given me the hump and lost my pension too as I will be moving it as soon as I can.

I don't mind paying, just felt what they were charging to be a little on the greedy side. It would have been nice if the fee went down the closer to the end of the tie in you were.

Still, expecting UK banks to be anything but greedy is perhaps a little hopeful and as you said I did sign up to it.

The other interesting thing I have found out with this house move is that everyone I owe money to wants it NOW and everyone he owes me expects me to wait up to 21 days.

JohnInDebt

Some people will claim that this ERC is to re-coup the bank's losses as you wish to leave a discounted period early, if this were the case it would surely be on a sliding scale.

I'm all for banks recouping 'lost' profits when someone sells up early (after all they've benefitted from a discounted rate), but to have 1 fee for the entire ERC period is unfair and should be challenged (especially so close to the end date).

GaryP_2

John

I totally agree with you and I was more than happy to pay something to make sure they were not out of pocket. But £2500 for paying 5 weeks early is in my opinion close to daylight robbery.

Gary

dunstonh

Its seems fair enough to me. These terms were known from the outset and you have been benefiting from a cheaper rate (or enhancement of some sort) during the term of the tie in that was no doubt more beneficial than the standard variable rate and possibly more beneficial than the £2500 you have to pay now for you choosing to break the contract.

You made an informed choice that cost you this money when it didnt need to. Had you considered staying with the same lender for example?

cattie

GaryP wrote: »

I was tied into a reduced interest mortgage for 3 years and paid it off 5 weeks early. I had no choice as this is when my buyers wanted to move and I didn't want to lose them.
:mad:

But you did have a choice, you chose to sell your house before the redemption penalty period was up. Had you chosen to start to market your house literally just a few weeks before the early repayment charge was up, which incidentally would have been the most sensible thing to do, you would have avoided the erc altogether.

Orrible

I have a 2 year fixed term contract with GMAC.
My wife and I are seperated. We also have another property that a tennant moved out early from, leaving us owing the debt of mortgage arrears.
We have no option other than to sell after one year.
They want 6%, which equals £15,000 for the second year on a £256,000 mortgage.
The financial advisor told us the penalty reduce monthly when we agreed to fixed term.
What can we do? We wrote to them and they declined our request to reduce the penalty. If it is in the contract, can we claim the charge is un-reasonable?
The £15k is nearly the same as paying for the emty house for a year.
Before you ask. No there are no tennants about.. the debts are mounting.

david29dpo

Selling 5 weeks before the end of a 3 year deal is silly, sorry to say. Anyone taking such deals must think of ALL the reasons they may have to redeem before signing.

homer_j_3

Orrible wrote: »

I have a 2 year fixed term contract with GMAC.
My wife and I are seperated. We also have another property that a tennant moved out early from, leaving us owing the debt of mortgage arrears.
We have no option other than to sell after one year.
They want 6%, which equals £15,000 for the second year on a £256,000 mortgage.
The financial advisor told us the penalty reduce monthly when we agreed to fixed term.
What can we do? We wrote to them and they declined our request to reduce the penalty. If it is in the contract, can we claim the charge is un-reasonable?
The £15k is nearly the same as paying for the emty house for a year.
Before you ask. No there are no tennants about.. the debts are mounting.

You are given 2 opportunities to check what your adviser has told you - the illustration before you sign the app. The illustration that comes with the offer. You should have read these and questioned.

dunstonh

Many penalties are step down but annually rather than monthly.

Buy to lets are unregulated so you have virtually no consumer protection. Plus, a mortgaged buy to let is a high risk investment. The consequences of it going wrong are often significant and this is part of the risk you accept when you enter into this transaction.

The mortgage offer letter you signed would have had the terms of the mortgage and your solicitor would have gone through these terms with you before you signed the contract. If they are charging in accordance with the contract then there is nothing you can do about it.