Is the early termination fee negotiable?

Comedy

Hi,

I have a property which I used to live in but relocated so have for a short while rented out while I try to sell.

The place is in Central London and the buyer I have lined up is looking to buy as an investment so they can again rent it out.

Problem is that they would like to buy before April 1st when the stamp duty rules change and I would like to sell after March 31st - when my fixed period ends.

The exit fee is about £5k in the last year but realistically I am going to sell the place with only a couple of weeks to go until the end of the period.

Does anyone have experience of negotiating these fees with the lender at all? I would like to speak to them and make an offer of an amount to settle it as I know the fee is intended to represent the lenders cost of carrying the cash for the remaining term of the mortgage. I am also aware that the Ombudsman says that they do not accept case by case disputes on fees but only if there is an issue with the product itself. So I know the best I can do is ask nicely.

Any thoughts anyone?

Thanks

David_White

You can't negotiate the Early Repayment Charge.

What incentive would a lender have in doing so?

JimmyTheWig

David_White wrote: »

You can't negotiate the Early Repayment Charge.

What incentive would a lender have in doing so?

Good customer service - customer more likely to use them in the future.
If it's a toxic mortgage they might be happy to get shot.
If the mortgage rate is below one they'd offer these days.

If they're looking at £5k ERCs then the customer might hold on for a couple of weeks. For £1k fees they might go for it. By negotiating the lender gets £1k rather than nothing.

[Not saying I think it's possible in reality, but there are reasons why they might want to go for it.]

JimmyTheWig

Comedy wrote: »

Problem is that they would like to buy before April 1st when the stamp duty rules change and I would like to sell after March 31st - when my fixed period ends.

Depending on how you read this, would it work to complete on 31st March itself?

POPPYOSCAR

JimmyTheWig wrote: »

Depending on how you read this, would it work to complete on 31st March itself?

I doubt it.


We recently redeemed part of our mortgage.


The fixed rate ended on the 31st December. The redemption date was given as 1st Jan. They said if we paid the money on 31st dec. we would be redeeming early and would face exit fees.They would not accept payment and apply it from the 1st.


We ended up paying it on 4th Jan as that was the earliest they were open to accept the payment.

davidmcn

JimmyTheWig wrote: »

Good customer service - customer more likely to use them in the future.

If you are simultaneously taking out a new mortgage with them, then yes they might be prepared to "port" the product over to the new property. But otherwise - no, I've never heard of a bank that's been prepared to give me £5k on the offchance I might come back to them in the future.

Thrugelmir

Comedy wrote: »

Does anyone have experience of negotiating these fees with the lender at all?

No basis on which to negotiate. You've signed a contract.

Are you prepared to lose your buyer?

as I know the fee is intended to represent the lenders cost of carrying the cash for the remaining term of the mortgage.

That's a simplification. To maintain the lending margin. The lender will back to back your debt with equivalent fixed term funding. Your debt will from part of a bigger bundle, say a 1,000 mortgages with similar terms and duration. You settle early so will the lender.

Jhoney_2

Why doesn't your buyer pay the ERC - they will still make a saving on the SD will they not? Then they can pick whatever that you can mutually agree before April.

If you are not desperate to sell, I would tell them to suck it up or jog on - I would be loath to start risking my business relationship with my lender for the buyer.

Or

Wait for another buyer after the fixed period, which would be preferable imo.

I'm not big on banks, but them not getting what they are due, so you can sell/move on and so that buyer can keep their SD costs down is not a fair ask.

Thrugelmir

Jhoney wrote: »

Why doesn't your buyer pay the ERC - they will still make a saving on the SD will they not?

Cheaper to buy an alternative property.

amnblog

JHoney is on to something.

1. Ask your Lender (expect a no)
2. Ask your vendor to pay the fee or you don't complete until 1st April
3. Port what you have to the new proeprty and no fee to pay

Jhoney_2

Thrugelmir wrote: »

Cheaper to buy an alternative property.

Yet they have no idea that they will complete prior to April first whoever they purchase from....:search::huh::shocked::doh:.