Selling Up

JGullsy

Hello All,

Really after a bit of advice on some HUGE charges I have been hit with over the coming couple of days.

Basically back in June of this year, myself and my partner viewed a new build property and instantly fell in love with the design. At this point we were not living together, myself a home owner and her in rented. We decided it was a great idea to register interest in this house and see how things went...Fast forward a few months and the urge was still there and after a few more visits to the show homes we decided to embark on a risky but exciting journey to buy our first house together.

Taking everything that the builders had marketers had said to us we moved swiftly getting my house ready to sell, valued and on the market to be in the best position possible to secure the plot we wanted when it came up.

So within 3 days of the house going on the market .. full asking price offer. This is currently in the process of going through .. so would have thought happy times ahead..WRONG!

So I signed myself into a 5 year fixed in 2013 when I bought the house, first home, first rung on the ladder etc .. a little out of my depth when choosing the mortgage and didn't think I would be going anywhere back then...I hadn't met her yet (I know soppy!)!

SO before we put the house on the market we went to see my Mortgage company and chatted about our plans, this is where we got a bit misled.
The fee for redemption penalties is massive ... on a £118k mortgage with £113k outstanding I have a total redemption penalty of £6040! If you do the sums..yes its more than the original mortgage that 3 years in repayment!

We talked this through and were led to believe that if we took another mortgage out with them within six months this penalty would be recovered..OK not so bad we are not going to lose out as the time scale from the builders would work for us to secure this.
(I should add we are going into rented for a time as the plot was not secured at this point.)

Moving on from accepting the offer I contacted the Mortgage company again to get some figures to add to the conveyancing forms..this is when I was hit with full blown fact that I wont be able to get my redemption penalty refunded and the cost to me is going to be £6040, and there doesnt seem to be a way around it.

Now I know the whole "terms and conditions" etc..but on investigation this fee would be the same even if I was in the last 6 months of the term.. I can understand if I was a year in and wanted out..I am over half way through so surely it should reduce?
Luckily I have a bit of equity back from the sale, and still in a good position for the new property but its a hell of a wedge of cash to write off and would like to try and recover all of it if not some.

Any advice on this would be helpful, people experiences, ways around it etc?

Cheers
J

AnotherJoe

Given no one here can see the Ts&Cs of your mortgage, nor understand why the lender said yes and then later, no, i dont see why you expect anyone to be able to understand why " there doesn't seem to be a way around it."

Have you asked them to provide in writing why they said yes and then changed their minds?

You should also take into account that builders estimates are notoriously uncertain, if you were relying on less than a six month hiatus, that might not happen anyway.

You also say "Now I know the whole "terms and conditions" etc..but on investigation this fee would be the same even if I was in the last 6 months of the term.. I can understand if I was a year in and wanted out..I am over half way through so surely it should reduce?" which shows you dont understand the whole "terms and conditions" etc.

All I can suggest is what i said above, write to them asking why the position changed and state you you've made your commitments based on that initial advice, then again, if you haven't exchanged yet, number of legs to stand on = 0.

amnblog

Are you saying, you have now already sold and incurred the early redemption charge?


Who is the Lender?

JGullsy

AnotherJoe.. based on the way your reply read you were never in the intention to help but basically mock the way I have approached this. Correct you wouldn't know the terms and conditions of my mortgage, however referring to the fact I don't is a little bit far fetched. Reading this paragraph back, I was referring to common sense on repayments and outstanding balance fees over periods of mortgages. As I said I was a first time buyer at this point, with little knowledge of the way these things work in the mortgage world and something I will look closely at in the future.
The background I have provided was just to give users like yourselves the position I have put myself in. More so I am after advice on people experince with redemption penalties? Do you have any of these? If you do I would love to hear about it and if you were able to negotiate on them.

JGullsy

I was under the impression from a meeting to discuss future plans with the mortgage company that I would be able to reclaim the penalty charge on taking another mortgage with themy..so this was the plan. Since then a bit of back pedaling from leading us astray shows we can't do what we set out.
So having now sold and the process underway it seems that I can't avoid the penalty charge.
The lender is the Principality.

pjcox2005

That's a shame that you've had to pay more but hopefully it's worth it for a house you clearly want.


It won't be much consolation but my understanding is on 5 yr fixeds, the bank/building society price up there anticipated costs based on the cost to them of borrowing the money over that timeframe.


They then have to include early redemption penalties at a high price to prevent people buying out of the term early, which would result in them continuing to have the agreed borrowing costs (as they are locked in) without the payments from you (and potentially no ability to on lend).


Seems less of a point in todays rates, but say you fixed at 5% but interest rates plummeted to 1%. If you could just walk away (or at a low cost) you just pay off mortgage and get a better one leaving them out of pocket.


It basically transfers some of the risk on to you in order to allow them to offer a product which gives certainty for five years but is more restrictive.

BJV

OP a bit harsh. This is a public forum and while you may not like all the answers when you invite people to give their views you have to be prepared to take it.

I did not read it as though the posts where having a go??? But hey I understand if I was buying my dream home and found out that I had to pay an extra £6,000 ish I would be devastated.

Op I genuinely hope that you can sort this out, I would go see a financial adviser.

P.s Good luck moving in together.

JimmyTheWig

JGullsy wrote: »

I was under the impression from a meeting to discuss future plans with the mortgage company that I would be able to reclaim the penalty charge on taking another mortgage with themy..so this was the plan. Since then a bit of back pedaling from leading us astray shows we can't do what we set out.
So having now sold and the process underway it seems that I can't avoid the penalty charge.
The lender is the Principality.

Reclaiming the ERCs if you get another mortgage with them within 6 months is pretty standard, I believe - though I don't know anything about Principality. If they are now saying that they don't do this then I would definitely get that double-checked. If they still say that that is the case then the complaint is based on the fact that you acted on incorrect information they originally told you.

But generally the problems people have here are that the mortgage company refuse to give a mortgage on the new place. So you are allowed to port your mortgage, but in reality aren't able to.
For example, if this mortgage company don't do new builds, then they won't give you a mortgage on the new build. Or if they insist that the mortgage you take out must be in the same names (i.e. without your partner) then you won't get your ERCs back.
If this is the case then there is often not a lot that you can do.

JGullsy

BJV .. thanks for your wishes for the future.
Of course I know the deal with how replies can come across on these things, maybe my reaction was a little to strung as I'm on a 6/6 hour night shift rotation whilst away and trying to do all this.
I appreciate all feedback but there was not much I could take from the response and as you point out if you were to lose £6k then you would be devastated also.
I'm just looking for any experince in getting a result in my favour...

csgohan4

bottom line is you signed up for a long 5 year deal and now you want to move 3 years into your deal.

Your T+C will stipulate how much you have to have ERC, it is in your contract and you have to pay it one or another, either directly or by trying to get another mortgage with them if that is their condition to avoid ERC.

No amount of strangers commenting will change this and I'm afraid it is something you don't want to hear. Have you tried contacting your lender to double check the figure?

At the end of the day you signed the 5 year deal not the lender and hence you have to be responsible for your decisions, including breaking it early.

JGullsy

Csgohan4

This is a fact that I resigned myself to when I decided to proceed with the offer.
I am fully aware of such actions and have done all that has been mentioned by all posts so far, and you are right it's something I don't want to hear as it's a heck of a lot of money, but it is what it is and if there is no way around around it then so be it.
However with the likes of PPI and charges being reclaimed I hoped there may have been a way do ease a bit of the fee off...