Mortgage penalties

Pezz

Hi,
I'm in process of moving house and this should happen either December or January. I have a mortgage deal with my current lender and I am looking to change lenders. The deal with my current lender finishes on the 31st December but my last payment on this deal is the 1st December. My lender has advised that if move mortgages before the 31st December I have to pay 1% penalty even though the last payment would have already been made. Does anyone if there is any way around this?
Thanks
Perry

dunstonh

Does anyone if there is any way around this?

Yes. Dont move until after the penalty period has ended.

The deal with my current lender finishes on the 31st December but my last payment on this deal is the 1st December.

Irrelevant. You are still borrowing the money and that is subject to daily interest. The monthly payment on the 1st Dec lowers the amount being borrowed but you are still borrowing money.

Pezz

Thanks for the replies, I thought this would be the case, I’m hoping to put the move off until Jan, just depends on the buyers.
Regards
Perry

magpiecottage

It may depend on the deal you are on. Generally, the penalty would be expected to reflect the anticipated loss to the lender if you got out early. It is, though, allowed to calculate this on on the basis of what might have been anticipated at outset or when it actually happens.

If it was excessive, FOS might deem it to be an unfair term in a consumer contract. However, that is not guaranteed.