Redemption Penalty rip off

macaque_2

lynnexxxo wrote: »

I disagree. You sign a mortgage deal which clearly states the penalties for an early redemption. The OP should have checked if they had any early redemption fees before agreeing to sell.

Sorry, OP, that sounds harsh, could you explain to your sellers your problem and possibly even offer a slight price reduction.

Your conclusion doesn't sound harsh, it just sounds like the weasel words of a jobsworth.

The concept of unfair contracts was introduced to stop unreasonable terms in contracts. That is exactly what this is. Doubtless the OP would be happy to extend the loan for another two months. What OP wants to do is sell a house. The mortgage could easily be kept on and secured against something else for two months.

The penalty should be there to protect the lender from people pulling out of deals when interest rates go the wrong way. In this case the lender is simply using it as a trip wire to skim £9K from the OP. It is a totally unreasonable and disproportionate penalty. Borrowers can never anticipate the small print and implications of this sort of outcome in advance.

silvercar

Just tell your solicitor to work slowly. If the offer has only just been accepted, he can easily drag out the legals so that no-one is in a position to exchange before Xmas. Then its easy to say you will exchange in January and complete end of Feb.

ginvzt

A similar situation happened to us when we bought our house last winter. We got our offer accepted in beginning of December 06, with the agreement of exchange Jan07 completion as soon as afterwards (we were FTB, they said they would even move into rented to facilitate). Then things started to drag on without explanation whatsoever. When we put in an ultimatum of exchange by end of Feb or pull-out, the seller comes back saying "we would do that if you pay 2000odd quids in Early Repayment charges"
I was fuming: what did that come from? he's is a CPA, and only at the last minute realises there are ERC? Give me a break!
TBH we would have been more than accomodating and agreed to a different timescale, had they told us straight away in the initial negotiations.

In the end we said sign now or find another buyer, and they did capitulate. It's not our fault they can't read or count.

david29dpo

I am sorry to say this problem is of your own making. You got a cheap mortgage for 2 years with ties, now you want to change them. If for example I got a free skybox in exchange for half price monthly subs for 2 years instead of paying £200 for the box, I would not expect to be able to cancel before 2 years. I too am on a mortgage deal for 3 years with a high penalty if i redeem, so i wont be.

macaque_2

david29dpo wrote: »

I am sorry to say this problem is of your own making. You got a cheap mortgage for 2 years with ties, now you want to change them. If for example I got a free skybox in exchange for half price monthly subs for 2 years instead of paying £200 for the box, I would not expect to be able to cancel before 2 years. I too am on a mortgage deal for 3 years with a high penalty if i redeem, so i wont be.

(1) There will always be people who value rules above justice. If the contract had allowed the lender to break the borrowers legs for late payment, people like you would say:

"if they didn't want their legs broken they should have paid on time" (Note to the reader. This bit should be read in a high voice with thumb and forefinger holding nose closed.)

(2) You didn't even read the OP properly. They did not take out a 2 year fixed rate deal.

(3) Using the Sky box contract as an example was dumb. In the sky box case, liability for early cancellation shrinks over the life of the contract. That is exactly the principle the OP would have wanted to be applied.

(4) Doubtless the OP wouldl be happy to keep the mortgage for another two months. The lender is effectively blocking the house sale by being inflexible which how the money is secured. It's amazing how flexible lenders become when the boot is on the other foot. How many times have we had credit pushed at us.

david29dpo

2 years of 5, no difference. The sky example was just that, an example to simplify. I do not condone the lenders T&C but no one held a gun to there heads when signing. Moral, dont do it if you dont like it. You cant have it both ways. Simple really.

macaque_2

david29dpo wrote: »

2 years of 5, no difference. The sky example was just that, an example to simplify. I do not condone the lenders T&C but no one held a gun to there heads when signing. Moral, dont do it if you dont like it. You cant have it both ways. Simple really.

You did not read the original post properly and you cited an example that defeated your own arguement. The terms of the Sky contract is inherently fair (in this context) because the penalty is proportional to the risk for the lender. The terms of the OP's contract is totally disproportional. If someone steals your Renault you are not entitled to have a Bentley as compensation. Your statement "You cant have it both ways" is just a meaningless cliche.

Remember the first law of holes: When you are in one, stop digging.

sarkin

You signed a contract now you want to break the contract. How would you feel if the lender contatcted you and said they wanted to finish the contarct early. Of course you would say no and that is what they have done.

JohnInDebt

If the OP wanted to sell up immediately after signing up to the 5 year discounted deal then I'd say fair enough, but as it's so close to the end date I find it disgusting that they're trying to charge so much with just a couple of months to go on the deal.

The two monthly payments remaining on the deal come to £2,100, it's disgracefull that they're holding out for £9,000.

lynnexxxo

macaque wrote: »

Your conclusion doesn't sound harsh, it just sounds like the weasel words of a jobsworth.

The concept of unfair contracts was introduced to stop unreasonable terms in contracts. That is exactly what this is. Doubtless the OP would be happy to extend the loan for another two months. What OP wants to do is sell a house. The mortgage could easily be kept on and secured against something else for two months.

The penalty should be there to protect the lender from people pulling out of deals when interest rates go the wrong way. In this case the lender is simply using it as a trip wire to skim £9K from the OP. It is a totally unreasonable and disproportionate penalty. Borrowers can never anticipate the small print and implications of this sort of outcome in advance.

I agree in principle that the early repayments excessive and disproportionate. However you can not expect the bank to agree to the OP keeping his mortgage on , secured on 'something else'. What ? If the OP is buying another property fair enough, appraoch the bank to port the mortgage. What if the OP sells his house and runs off with the money (sorry OP I know you are unlikely to do this but the bank has to cover the possibility) - the bank would have no way of reclaiming its money.

Early repayment charges are a fact of most fixed mortgage. If you don't like them then there is always the SVR.