Early Repayment Charge on Mortgage Redemption

battheman

I am 2 years into my 5 year fixed rate mortgage. My early repayment charge is circa £3500 (3%). I understand that I entered into a contract and this is a formality that is undertaken when exiting that contract before the due date.

Here's my issue: I have moved out of my house, and moved into a rented property which is in the extended family portfolio, and bigger than my mortgaged property and is better all round for my kids to thrive in etc etc. My current mortgage is with Tesco Bank (who were cheapest at time of taking this remortgage out). Tesco Bank would not allow me consent to let on the property nor do they offer a buy to let morgage product , so I was stuck and have effectively been forced to remortgage with a company that do BTL mortgages, and in doing so incurring the charge.

So the question is: Is this early repayment charge fair and if not can somebody point me in the right direction to get it refunded?

amnblog

Yes it is fair. It's the contract you signed for.

Unless you want to try to pretend you were not aware of the fees you won't get a refund.

Best for beans.

dunstonh

Tesco Bank would not allow me consent to let on the property nor do they offer a buy to let morgage product , so I was stuck and have effectively been forced to remortgage with a company that do BTL mortgages, and in doing so incurring the charge.

Seems fair enough by Tesco.

So the question is: Is this early repayment charge fair and if not can somebody point me in the right direction to get it refunded?

Yes it is fair. You are the one breaking the contract and the lender needs to recover their costs from you. Refunding you would involve passing costs on to others. Why should others have to pay for you? That would not be fair.

ACG

You signed up to a 5 year fixed rate.
You chose to end that deal early.

Thats not meant to read as it probably does, but it is that black and white. The charges are 100% valid and unless you get very lucky I can not see Tesco agreeing to refund them.

mclaren11

You need to signed year fixed rate. When you want to renew mortgage. Then you need to sign agin with some extra monry.

AnotherJoe

battheman wrote: »

I am 2 years into my 5 year fixed rate mortgage. My early repayment charge is circa £3500 (3%). I understand that I entered into a contract dont take this too personally , but reading on, you don't act as if you do understand that . and this is a formality that is undertaken when exiting that contract before the due date. It's more than a "formality"

Here's my issue: I have moved out of my house, and moved into a rented property that was your free choice which is in the extended family portfolio, and bigger than my mortgaged property and is better all round for my kids to thrive in etc etc.good for you but irrelevant to your mortage contract. My current mortgage is with Tesco Bank (who were cheapest at time of taking this remortgage out). Why is that relevant ?

Tesco Bank would not allow me consent to let on the property their perogative nor do they offer a buy to let morgage product unfortunate but even if they did they might not offer you one , so I was stuck and have effectively been forced to remortgage with a company that do BTL mortgages, and in doing so incurring the charge.

So the question is: Is this early repayment charge fair and if not can somebody point me in the right direction to get it refunded?

Yes it's fair. All your justifications before don't affect the contract you freely entered into. You also chose a 5 year term yet only two years later had completely changed what you were doing and are now expecting them to tear up the contract.

Imagine if it was the other way round, and Tesco said "yes it's a 5 year term but we think rates are likely to rise so we are preemptively raising them and also increasing the ERC, we think that's fair"

Point being, neither of your get to arbitrarily change the contract.

Thrugelmir

battheman wrote: »

Here's my issue: I have moved out of my house, and moved into a rented property which is in the extended family portfolio, and bigger than my mortgaged property and is better all round for my kids to thrive in etc etc.

Then the lesson learnt is not to enter into a 5 year contract when your circumstances may change in 2 years. This was entirely at your own discretion. Nothing to do with the lenders.

w00519772

I also signed up for a five year mortgage 2.5 years ago. I thoroughly read the contract and asked questions about consent to let and porting the mortgage as I knew these may be required in the future. If these were not offered then I would of chose another (more expensive) lender. I asked a question recently about "borrowing back" the overpayments I had made. I thought this was offered, however it is not. This is a lesson learnt for me as I have nothing in writing (email) from the mortgage advisor to say it was. Therefore this is a lesson learnt i.e. I have to live with the consequences (I thought about borrowing back to pay a deposit on another house).

In my opinion, you should of thought about this before you signed. Sorry if this sounds harsh.

Thrugelmir

w00519772 wrote: »

If these were not offered then I would of chose another (more expensive) lender.

Never be guaranteed contractual terms. Always be subject to.