Early redemption fee in the last month of fixed rate deal

minimadtrix

glentoran99 wrote: »

Could you not port your mortgage avoiding the fee?

Sadly not, we did not meet the lending criteria this time with the current company due to issues of OH being on long term disabiity benefits, wanting to take the mortgage until he was 70 and not being able to prove his retirement income :mad: Else it would have been so much more simple

csgohan4

It is what it is and the T+C are clear for you when you signed up.


No harm in asking but don't expect much. Whether you want to end it 30 days early or 300 days early the terms apply and your locked in.


It's not your mate down the pub who lent you the money but lenders who have strict rules which were plain for you to see at signing.

mrginge

minimadtrix wrote: »

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.

i'm afraid you misunderstand how the bank obtained the money that they then leant to you on your fixed rate.

Any movement in interest rates after you arranged that deal makes absolutely no difference to the margin the bank is making.

They will not agree to negotiate your ERC because they themselves have to pay an ERC on to their lender.

The answer is to delay your completion.

dunstonh

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.

Borrowing is funded by investors. Mainly via the money markets. If you repay early then the lender would suffer the penalties if they tried to get out of paying the investors.

minimadtrix

dunstonh wrote: »

Borrowing is funded by investors. Mainly via the money markets. If you repay early then the lender would suffer the penalties if they tried to get out of paying the investors.

And as big fish in the money market, I'm sure they could afford to hold back the 25 days to avoid their penalties

lee111s

minimadtrix wrote: »

And as big fish in the money market, I'm sure they could afford to hold back the 25 days to avoid their penalties

If they done that for every customer it wouldn't be a very good business model.

You have two choices really, pay or wait.

dunstonh

minimadtrix wrote: »

And as big fish in the money market, I'm sure they could afford to hold back the 25 days to avoid their penalties

But why should they?

it is too expensive to do these contracts on an individual basis. So, they are arranged and packaged on a bulk basis and everyone agrees the terms. You included.

You cant keep moving the line in the sand because there will always be people the wrong side of that line.

ViolaLass

minimadtrix wrote: »

And as big fish in the money market, I'm sure they could afford to hold back the 25 days to avoid their penalties

Indeed they could. You could also offer to pay double the penalty to thank them for giving you the mortgage but why would you?

Thrugelmir

minimadtrix wrote: »

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

So if your employer decided not to pay you your contractual entitlement at the end of the month, you wouldn't mind?

There's nothing unfair about the contract you willingly entered into when you selected the fixed rate rate mortgage contract. So you'll need to abide by the terms and conditions you agreed to or suffer the consequences.

minimadtrix

Thanks for the comments.

I've been in contact with the company, unfortunately I had to lodge a complaint, which I didn't really want to do, but was the only way to get in contact through their website. Anyway, had a phone call today to say they have looked at our account, acknowledge we are leaving due to no fault of our own, have been great customers and, as a goodwill gesture they will waiver the redemption fee completely!! :j

More than what I expected, but well done Cheltenham & Gloucester for being so understanding and helpful :T