Early redemption fee in the last month of fixed rate deal

minimadtrix

Hello,
Now, before I start, I was fully aware of the Early Redemption fee and, if I have to, will pay it, but begrudgingly

My fixed rate mortgage deal ends on 31 January 2017, but we are expecting to complete our sale on 6 January 2017 (this is what all the parties are aiming for).

My last mortgage payment under the fixed rate deal will be 2 January.

The early redemption fee will be approx £1800. However, if I were to continue with the mortgage, the interest on the mortgage on 31 January would be approx £180.

During the time we've had the mortgage, interest rates have never increased, so we've effectively been paying over the odds anyway - our choice by going for the fixed rate

I've never defaulted or made overpayments, it's just been a standard mortgage payment each month.

So, my question is how likely might it be that I can successfully renegotiate the early redemption fee?

ViolaLass

0%.

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minimadtrix

ViolaLass wrote: »

0%.

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Thanks for the useful answer. But I'm just trying to work out how they can justify a redemption fee that is 10x the interest they will lose out on, particularly when interest rates have dropped since we took out this fixed rate.

elsien

Do they need to justify it if it's in the terms and conditions you signed up to when you took out the deal?

minimadtrix

elsien wrote: »

Do they need to justify it if it's in the terms and conditions you signed up to when you took out the deal?

Yes, I think so. Often we're told that any fees paid should be reasonable .... so is paying this amount reasonable? It equates to about £72 a day for the rest of the Fixed rate term.

lee111s

Yes it is reasonable, as those were the terms set out at the time that you signed up to. You obviously agreed that the terms were reasonable when signing, otherwise you wouldn't have signed.

Why not just advise the rest of the chain you can't complete until the 31st?

You haven't been paying over the odds. You're paying the rate to ensure the lender can ensure they're getting enough money back from you to cover their costs for borrowing the money. Their borrowing is often set for x years, which is why ERC's exist.

ACG

If you are unhappy, why did you agree to it?
All you can do is put in a complaint after it happens and see what they say. I can see your point in theory but in practice you agreed to something and are now unhappy...that is not their fault.

TrickyDicky101

Can you (and the chain) not agree a delay on completion?

minimadtrix

I didn't say I was unhappy - my first post acknowledges I knew the T&Cs and that I will pay if need be, however, it's a bit galling to think I'm only 25 days off the end of the term with no penalty.

We've already had delays - we should have completed now, had there not been a sale fall through on one of the properties, but has now sold again and we've kept the same chain. I don't think it would have been such an issue that I'd come on here asking for advice had I had 3 months left to pay.

Unfortunately, people seem to think I'm blind as to the T&Cs - I wasn't. I've kept away from posting from this site for a while because some people's responses are more judgmental than helpful. It was just simple question and curious as to people's opinions on the situation.

Thank you for those that have posted positive responses

glentoran99

Could you not port your mortgage avoiding the fee?

minimadtrix

lee111s wrote: »

You haven't been paying over the odds. You're paying the rate to ensure the lender can ensure they're getting enough money back from you to cover their costs for borrowing the money. Their borrowing is often set for x years, which is why ERC's exist.

I knew that statement would be misinterpreted. By 'over the odds' I meant that fixed rates are usually a little higher than standard variable - well in this climate.