Fixed rate exit fees

dunstonh

Jmy wrote: »

Hello, I am in the tenth year of a ten year fixed rate mortgage at just over 4% part of an 18 year year term mortgage. I have contacted Leeds building society about not having to pay 10% exit fee as I do not intend to purchase another property so I am not transferring to another deal. As they can discuss a new deal in the next few months but refuse to use their discretion with the exit fee on outstanding balance I would prefer to avoid this substantial bill. Clearly the intention behind the fee is to discourage people transferring to cheaper deals. However, my intention was never to sell up having paid over 4% for the last ten years. However, Leeds are keen to talk to me about deals for the remaining 8 years which is ludicrous as they refuse to use their discretion with the exit fee even though I will be exchanging a few months before the ten year fixed rate ends. Any ideas, views or suggestions as I know contractually I am stuck. Thanks Leeds BS.

When a lender gives you a fixed rate, it has obtained the funding for that fixed rate by other means. It could be fixed term deposit accounts or it could be it raised the money on the money markets by agreeing to pay an amount to investors.

They offer you a contract with terms and you decide whether they are acceptable or not. You agreed to it and that means both sides agree to those terms even if, in the future, there is a period when those terms are not favourable for one or the other.

If you choose to break your contract, the lender still has to fulfil its contracts with the depositors/investors. Or suffer a penalty related to amounts cleared early. So, it either gets you to pay the costs or it passes it to other borrowers. A discretion to reduce would mean others paying.

So, why do you think it is fair that others should pay for you wanting to break the contract?