Locked into a mortgage via multiple tranches?

JBeverly85

Hello.

I wondered if anyone has had any experience with or solutions to being locked into keeping your mortgage with one provider through having multiple tranches expiring on different dates? That may sound a little complex, so I'll explain the situation using my example...

I have a single mortgage with my bank on our home and, as a result of moving house and borrowing more, it is split into two tranches on two separate deals that expire a year apart from each other. Both deals are subject to material early repayment charges if you repay before their expiry, and the bank's standard variable rate (SVR) is very high in comparison to the available mortgage product rates.

This leaves me with two problems:
1) Having to pay a product fee to enter into a new deal for each tranche (effectively double fees versus the mortgage being on one tranche) when they expire; and
2) The inability to change mortgage lenders without sitting on a penal SVR for a year on one of the tranches or incurring early repayment charges on the other, both of which run into thousands cost-wise.
The end result is me having to stay with the same lender and perpetually enter into new product deals on the expiry of each tranche's existing deal to avoid the SVR.

Having discussed this with my bank I've been advised there's very little they will do to help the situation. It's a shame really as I'm very happy with all other aspects of my relationship with them.

I'd be interested to hear if anyone else is caught by the same problem and, if so, whether they've come across any solutions. This seems something of an unreasonable and rather complicated situation for a residential mortgage !

Thanks in advance,
Jonathan.

YHM

Sometimes its best to bite the bullet and stomach an ERC to align everything back into one account....

ACG

Is one of the balances fairly low? If so it might be worth taking the hit on that portion of the Mortgage?

But in reality, the lender is right. There is very little they can do. You will need to take the hit at some point. Or depending on how far apart they are, it might be doing say a 3 year fix on 1 part and a 2 year fix on another and then they may end up on the SVR a little closer together?

JBeverly85

Thank you for the replies.
Unfortunately the balances on each tranche are pretty similar. My current idea is to move one part on to a tracker with the ability to switch to a fixed rate, and then when the second tranche expires, move them both on to the same single fixed rate for a new two year deal. This means I'm tied up with my lender for another three years, but avoids large ERCs. The downside is far better rates are available from other providers in the meantime.

Thrugelmir

JBeverly85 wrote: »

The downside is far better rates are available from other providers in the meantime.

You'd face a sizable ERC potentially even with a single mortgage account.

From the lenders perspective was your choice to end up with multiple sub accounts. As a business not their issue to help you out at their expense.

Does your lender offer any fee free product options?

JBeverly85

Thrugelmir wrote: »

You'd face a sizable ERC potentially even with a single mortgage account.

From the lenders perspective was your choice to end up with multiple sub accounts. As a business not their issue to help you out at their expense.

Does your lender offer any fee free product options?

The idea with the single tranche mortgage would be to repay once the deal has ended when no ERC applies. To achieve that at the moment requires sitting with half the mortgage on SVR for a year, and that ends up being quite expensive.
The lender does offer fee free products but they are at a higher rate that, when considering the mortgage balance it would apply to, makes incurring the fee more economical. They don't offer ERC free products, however.

And yes it's a fair point that you make about the lender's perspective; I appreciate why they wouldn't want to budge on this. I wonder whether it's reasonable though - if honest, in the flurry of finding a home, selling a home, getting a mortgage approved, etc. this future issue of being perpetually locked into the same lender wasn't something that dawned on me at the time. I normally like to think I'm quite savvy with personal finances so would be surprised if a number of others weren't caught out by this.

Thanks for the comments though. Based on what I've read so far it seems there's not a huge amount that can be done.

getmore4less

try putting up the details.

lender and both mortgage amount/rate/term(both fixed and full), SVR

if rates are really a lot better elsewhere there will be a solution.