Early repayment charges - help!

Micksbarrylondon

We had a mortgage free property and took out a re mortgage against it to start a property renovation business. Then Brexit happened! We bought and sold one property but because of the poor market, made no money. We now have the value of the mortgage sitting in our bank account. We got a fixed rate for 5 years and because we thought we'd be buying more, our mortgage has an early redemption penalty. Is there any way around this other than buying another property and continuing with the mortgage?

ACG

No chance.
Why is Brexit a problem? People still need homes and homes still need renovating. Put it this way, I expect to still be in business in the next 5 years. I expect a bit of a downturn from this year but nothing major. Lenders still have a pile of cash they need to lend out in order to pay the bills.

downhillfast

Brexit didn't make it so you made no money! Selling at a price that didn't make you a profit did that... the market has slowed a bit but property is still selling.

amnblog

I remember the 'property developer' TV programmes 10 years ago when Sarah spent the whole programme telling the 'developer they were wasting money and doing it wrong.

They then 'made' £30,000 profit on sale and probably would have 'made' £35K if they had sat on their bum as the prices had gone up 10% in any case.

Developers use the market to increase profit they don't rely on it to make profit.

dunstonh

Then Brexit happened!

Brexit hasnt happened.

because we thought we'd be buying more, our mortgage has an early redemption penalty. Is there any way around this other than buying another property and continuing with the mortgage?

Making bad business decisions is your fault. It happens in business sometimes. When dealing with assets with a volatile values it is a risk that you will always have.

AnotherJoe

Micksbarrylondon wrote: »

We had a mortgage free property and took out a re mortgage against it to start a property renovation business. Then Brexit happened! We bought and sold one property but because of the poor market, made no money. We now have the value of the mortgage sitting in our bank account. We got a fixed rate for 5 years and because we thought we'd be buying more, our mortgage has an early redemption penalty. Is there any way around this other than buying another property and continuing with the mortgage?

Unless your property renovation was right in the heart of London there would have been a minimal effect on house prices. Where I live they are still rising for example (30 miles from London). If your "business" however wasn't really property renovation but was mostly gaining from increasing house prices it's easy to see how choosing the wrong property and spending too much on renovation could leave you breaking even or making a loss.

As another poster said there are still people who need houses and still houses in poor condition that need renovation, so using the Brexit vote as an excuse to get out of the "business" you dipped your toe in says more about your business plan and commitment than anything else, one setback that wasn't even a loss is a pretty poor excuse, and if Brexit vote did affect house prices it would affect poor condition houses even more, so that's a non excuse, you ought to be able to snap up some bargains.

It seems to me it is a much harder job than the tv programmes make out, and maybe you've realised that, so if this isn't for you why not just accept that fact and pull out, taking the ERC as part of that cost ? Otherwise crack on with your plan. But don't blame Brexit, because it wasnt the problem and won't be the problem.

Thrugelmir

Micksbarrylondon wrote: »

Is there any way around this other than buying another property and continuing with the mortgage?

Repay the debt along with the penalty. Chalk what you've learnt up to experience. Making a loss isn't unusual when in business.

Westminster

Make sure you split the money across different banking licences in chunks of £75k to retain FSCS protection for the deposits