Redemption Penalty rip off

dmg24

Some people just should not be allowed to take out mortgages ...

JohnInDebt

Ignore some of the trolls on here ^^

Have a read through the Unfair Contract Terms.

Curv

How some people survive to adulthood is beyond me!

Still, the bank (depending on which lender it is) probably have the legal remit to secure the loan on anything at all - a racehorse, for example... or a painting. But in all likelihood it would be beyond their experience and they would see the request for what it is - an attempt to get out of the T&C of the FRM and not pay them their pound of flesh.

OP - do you or anyone you know own any property outright? The bank MAY agree to transfer their charge to 'unencumbered' property for the remaining term of the mortgage - but this would incur some costs and wouldn't be straightforward from a legal perspective. But it's a potential option, nonetheless.

The advice to rent the house to your prospective purchasers is worth thinking about as a means of delaying repayment of the mortgage, although many lenders refuse to grant consent to lease without first removing any 'special' rates like the FRM and will, therefore, charge the redemption fee anyway, so might not be the solution.

OP, your best bet is to ditch the 'banks are !!!!!!!s' attitude and go and talk to them, face to face. Chances are that their staff will see your situation for what it is* and will try to find a way to help you. If you go armed with smiles, suggestions and are willing to work WITH them rather than ranting, you'll get much further. You have much to lose by getting their backs up and nothing to lose by being nice.

*Technically, they are within their rights to charge the fee they told you they would charge you, but it's so close to the expiry date of the redemption fee that it feels unduly harsh.

macaque_2

sarkin wrote: »

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.

The borrower shouln't need to break the contract, they just want to sell their house. The lender has created artificial obstacles to force the borrower to wind up the loan prematurely. The lender could easily have security for the loan in the form of a deposit amounting to the total outstanding debt for two months.

I don't think I could have expected anything different from a person in your kind of job. Your profession lives off this kind of trickery.

lynnexxxo

macaque wrote: »

The borrower shouln't need to break the contract, they just want to sell their house. The lender has created artificial obstacles to force the borrower to wind up the loan prematurely. The lender could easily have security for the loan in the form of a deposit amounting to the total outstanding debt for two months.

I don't think I could have expected anything different from a person in your kind of job. Your profession lives off this kind of trickery.

The buyer DOES need to break the contract. They have a contract with the bank that the bank is willing to loan the money, on the priviso if they don't pay the bank will repossess the house. If they sell the house then the bank does not have any security against the loan.

Surely the OP has to take some of the blame for this situation, he willingly entered a contract with the bank. He should have checked any early repayment charges BEFORE deciding to sell his house.

I hope the OP can approach the bank and that they see that the 9k ERP is excessive and they can come to some deal. However I think spouting that the bank is the bad guy is not correct.

JohnInDebt

lynnexxxo wrote: »

The buyer DOES need to break the contract. They have a contract with the bank that the bank is willing to loan the money, on the priviso if they don't pay the bank will repossess the house. If they sell the house then the bank does not have any security against the loan.

Surely the OP has to take some of the blame for this situation, he willingly entered a contract with the bank. He should have checked any early repayment charges BEFORE deciding to sell his house.

I hope the OP can approach the bank and that they see that the 9k ERP is excessive and they can come to some deal. However I think spouting that the bank is the bad guy is not correct.

He's not trying to break the contract, he's simply trying to pay it up. With just 2 months remaining it's unreasonable for the bank/building society to claim a £9000 penalty. Simply claiming £2100 for the final 2 payments of the contract is not unreasonable.

macaque_2

lynnexxxo wrote: »

The buyer DOES need to break the contract. They have a contract with the bank that the bank is willing to loan the money, on the priviso if they don't pay the bank will repossess the house. If they sell the house then the bank does not have any security against the loan.

Surely the OP has to take some of the blame for this situation, he willingly entered a contract with the bank. He should have checked any early repayment charges BEFORE deciding to sell his house.

I hope the OP can approach the bank and that they see that the 9k ERP is excessive and they can come to some deal. However I think spouting that the bank is the bad guy is not correct.

There is zero risk for the bank if the borrower pays the bank the full amount of the debt as security for two months.

dmg24

Why should the bank back down? They are a business, not a charity.

JohnInDebt

dmg24 wrote: »

Why should the bank back down? They are a business, not a charity.

No one is asking the bank to 'back down'. He is simply trying to pay them what was agreed at the start of the contract (albeit 2 months early!!!).

lynnexxxo

Ok, yeah by paying back the money the bank has zero risk but they will still have lost out on money. The OP has been on a 5 year fixed deal which has a lower rate than the SVR.

The name 5 YEAR FIXED DEAL says it all really. its not a 4yr 10 month fixed deal.