Early Repayment Charge - Moving to a cheaper house

rathjam

Hi,

I'm hoping someone can offer some advice as searching documents online and even phoning my mortgage provider hasn't really answered my question.

Situation
I might have a new job which requires a home move (discussions ongoing). I'm currently four months into a two year fixed term mortgage with HSBC (we thought a move would happen in two years but it has happened sooner than expected).

I have an ERC which I believe is adjusted for number of days from the reading the literature (balance x 1% divided by 365 x no. of remaining days).

House prices are much lower in the area of the country we'll be moving to compared with where we are now. We don't need a larger property and actually might downsize so it's likely we'll be moving to a cheaper house (approx £100k-£150k cheaper).

The Issue
I've called HSBC who have said that if I move to a cheaper property I will have to pay the ERC in full as the mortgage will be settled and in order to port it has to be;

• same value mortgage
• same value property
• same payment period

The person on the phone says that in her information it says a proportion of the ERC would then be reimbursed to us when we took out a new product. However, she didn't know how much this would be.

The questions
Has anyone else been in a similar situation and be prepared to share their experience? In particular;

• What proportion was reimbursed? Especially if with HSBC
• Will there then be new product fees to pay? I've never moved home during a fixed term mortgage period before. I'm concerned any reimbursement would be cancelled out by a new product fee - and we only paid one 4 months ago.

Some addition info
We intend to keep the same LTV ratio and hope to use any equity released to make improvements to the new house.

The HSBC person said the only way to get all the exact figures was to call the sales team and go through that process which is a bit premature until I know the outcome of the job situation - hence posting here initially.

Many thanks in advance for your help/advice.

ACG

It will be in your mortgage offer/illustration.
Unfortunately we do not have access to HSBC so I can not check their wording, but it would usually be section 10/11.

Worrying that they could not tell you how it would work or even find out. I would think that is quite an important part of the job.

rathjam

ACG wrote: »

It will be in your mortgage offer/illustration.
Unfortunately we do not have access to HSBC so I can not check their wording, but it would usually be section 10/11.

Worrying that they could not tell you how it would work or even find out. I would think that is quite an important part of the job.

Hi ACG,

I have read every line of my mortgage illustration and it doesn't give any details on what will happen if we move to a cheaper property. It just gives details on the ERC that I highlighted in my OP. Not what the reimbursement would be when I took out a new product with HSBC.

I've already calculated my ERC using their formula but I'm wondering how much of that I'm likely to get back if I take out a new product given the terms for porting leave very little wiggle room for situations like this.

Thanks