Early Mortgage Repayment Charge

Peppette

My husband and his mother bought a house to rent out about 18 months ago and have since decided that they no longer want to rent. They have people who have made an offer on the house but during the selling process have been told that there is an early remortgage payment charge of £4,356.97. It was a buy to let mortgage, the house was bought for £125,000 and the deposit was in the realm of around £45,000.

Basically we were wondering if there was any way around paying it or maybe doing something less standard to at least get the cost down. Our mortgage advisor seems to be avoiding us and not returning any calls. Though my husband is off work next week so will probably go down to her offices.

Are there any possible alternatives we can explore or ideas that anyone has that we could ask our advisor (once we get a hold of her!) rather than just paying the full charge?

Thanks in Advance

Thrugelmir

If you sell the property and redeem the mortgage. Then the ERC stands. There's no rebate just because one party to the contract has decided to exit early.

ACG

As above, the only way to avoid it is to not complete on the sale until the end of the tie in period. Your buyers may be prepared to wait but they will need to re-apply probably closer to the time.

minimike2

My only suggestion would be to look and see if you have an overpayment allowance which is free of any ERC and make a lump sum reduction to the mortgage before it gets redeemed (if you have the cash short term to do that until the sale).

That way the ERC you pay will only be on the reduced balance accounting for your lump sum reduction.

Most lenders charge the ERC on the full balance on full redemption, even if there is an overpayment allowance (as full redemption is not the same as making an overpayment).

It might save you a small amount of the ERC that way, but it's the most you will be able to. You can not simply "get out" of paying something which is part of the contract to which you agreed. (Or in this case your husband and mother-in-law).

Peppette

Thanks Everyone,
We actually ended up ringing the company the mortgage was with directly. Turns out if we complete the house sale a couple of months later than planned then the term ends on the contract ends and we don't have to pay any of it.