Consent to Let expiry (HSBC) - Early Repayment Fee unavoidable?

Xanthippus

Hello MSE members!

I gained Consent to Let from HSBC in Dec '15 on a mortgage that started in Aug '14 with a 5 year initial term. When my Consent to Let expires in Dec '16, my google searches suggest HSBC will automatically ask me to move onto a Buy to Let product.

However, since I could fully repay the outstanding mortgage in Dec, would HSBC still apply the Early Repayment Charge in circumstances where they are the ones terminating the original product?

Misc - I've missed no mortgage payments, Loan to Value on the property is 40%, and when I requested a redemption figure in Nov '15 I was advised my Early Repayment Charge would be £3,000.

It would be great to hear about the outcome and experiences of others who reached a similar position and if you were able to payoff your mortgage without also having to pay the Early Repayment Fee.

Oh, and I assume if I do transfer to a BTL to product, my Early Repayment Charge is definitely waved?

Thank you.

davidmcn

Xanthippus wrote: »

they are the ones terminating the original product?

Surely you're terminating it by ceasing to use the property for owner occupation?

Xanthippus

David, certainly true. Probably should have worded my comment a little differently, as I understand the commitment I made and that we are now dealing with new circumstances.

But, I'm just curious what pragmatism HSBC might have shown previously in real life circumstances.

As I understand it this whole issue is treated very differently, depending upon which lender you are with. Some are often very reluctant to even give Consent to Let in the first place, others willing to offer 12 months, whilst others still might offer rolling 12 month periods.

MrJB

When did you take out your product originally? Does the early redemption penalty reduce over the life of the product?

Xanthippus

Hi MrJB, original product taken out in Aug '14 with a 5 year initial term. The Early Repayment penalty fee applied is 1% of the outstanding capital x number of years remaining.

Separately, I will just add I've overpaid the permitted maximum this year and intend to do so again when my next annual allocation becomes available.

davidmcn

Xanthippus wrote: »

But, I'm just curious what pragmatism HSBC might have shown previously in real life circumstances.

Pragmatically, they'll have in turn borrowed the money which they lent to you on a similar basis - the cost to them of you redeeming the loan early doesn't change depending on what you're using the property for. So I don't see why they would be likely to offer you any concessions.

Xanthippus

A very fair point David.

However, based on comments I have read, banks can choose to look upon a change of circumstances in ways that needn't lead to applying an Early Repayment penalty, even though they would have been entirely justified.

Why? Customer retention (savings and current accounts) and the expectation of future mortgage custom might well factor. I have no idea, I'm not privy to the banking world. But, whatever the reason, there certainly seems to be room for interpretation between institutions and within them.

It would be great now to hear from people that reached the end of their consent to let periods (especially with HSBC) to hear how it all played out for themselves.

Xanthippus

If any of the 'evening crowd' have any experience with this, it would be great to hear from you.

Mossfarr

My mortgage is with Royal Bank of Scotland and I was granted consent to let one year into a 5 year fixed term.
I was told that I would need to change to a BTL mortgage but not until the end of the fixed term so no early repayment penalties would be incurred.

dimbo61

No one has said you will have to change to a BTL mortgage or pay an ERC,s ?
I would be very surprised if HSBC did anything for the next 3/4 years till the end of the fix.
The fact that you are also overpaying also blows the " How will you pay off the mortgage " question out of the water.
Good LTV as well

dimbo61

Everything on Google must be true !