5% Early Redemption Fee with 1 Year Left - Help Please

Roy_Herts

Hello all, I have search the boards but cannot find any specific information on this.

I have a mortgage with Nationwide with just less than 1 year to go on a 5 year fixed rate of 4.89% interest. We are looking to get out of this now as opposed to waiting for the 11 months for the fixed rate to expire due to certain circumstances that would favour this option. The early redemption fee is 5% regardless of when you get out. Based on the balance of my current mortgage of 141,000 this would come to around £7500 with extra fees etc.

I know that I signed up to this arrangement and the terms and conditions are solid, but I wondered if you thought I would have any ground for a challenge of this fee due to Nationwide since rolling out a phased approach to all of their new mortgages as announced here:
(Sorry I cant post links as a new forum member but if you google 'Nationwide Early Redemption Fees' it will pop up)

5% for less than one year just seems too punitive to me, as surely they are charging excessively to cover their costs.

Any help would be very much appreciated.

ViolaLass

Why did you sign if you didn't like the deal?

Thrugelmir

Roy_Herts wrote: »

We are looking to get out of this now as opposed to waiting for the 11 months for the fixed rate to expire due to certain circumstances that would favour this option.

That's the nature of fixed rate products. They give peace of mind. Sometimes you win and sometimes you lose.

Complaining on the grounds that there's something currently better is a non starter.

Roy_Herts

The deal was good at the time, sourced by a FA and my first mortgage. I never thought I would need to exercise this option when I signed up and circumstances change. I am not after sympathy here, just whether there is any scope for challenge based on the turn around approach that Nationwide have had since I took out the deal (they have clearly woken up to the fact that this is unfair and have a tapered approach to all new fixed rate mortgages).

Roy_Herts

Yes I appreciate that. So no chance then and not worth pursuing. Just wondered if anyone knew of a similar success stories.

Roy_Herts

One additional question. Can I use by overpayment reserve that I have built up to pay the penalty to get out?

Thanks everyone

Jhoney_2

I had the same situation (with a different lender), where they charge right up to the expiry.

I missed out on all the rate drops that have occurred during these exceptional times and the more favourable terms offered to customers since. It really is just the way it is.

Imagine if we had secured really good fixed terms and then they pulled the plug or raised the rate mid-term ?

That's the beauty of a contract, it binds and protects both parties.

Perhaps if you are in a position to overpay at some point, you can mitigate the extra 7.5K over the life of the mortgage as they will get less interest out of you that way.

ViolaLass

Roy_Herts wrote: »

The deal was good at the time, sourced by a FA and my first mortgage. I never thought I would need to exercise this option when I signed up and circumstances change. I am not after sympathy here, just whether there is any scope for challenge based on the turn around approach that Nationwide have had since I took out the deal (they have clearly woken up to the fact that this is unfair and have a tapered approach to all new fixed rate mortgages).

Maybe they thought it was less attractive to borrowers than they had hoped. Doesn't mean it was unfair.

Thrugelmir

Are you intending to move house?

Roy_Herts

No, unfortunately not, remortgage the same property.

mrginge

Nationwide have to pay the penalty to their lender based on the terms agreed at the time the financing was arranged.

They have no scope to amend their costs, so why should they let you?