£25k Early Repayment Charge on a 5y fix - over 4.5 years in!

Owlish

Does anyone have any experience with early repayment charges? Our financial circumstances have changed since we took out our 5 year fix and we wouldn't be able to re-mortgage or pay the variable rate when it comes to an end in October this year.



House is now on the market, and our plan is to buy somewhere either with no mortgage or a very small mortgage (which is now all we'd be eligible for). Despite the fact that we're so close to the end of the term, our lender (Virgin), has said that we'd still be liable to pay the full early repayment charge which is just under £25k.



We're trying to make a financially responsible move rather than risk spiralling debt, and the £25k will make a big difference to us.


We're prepared to pay them the mortgage payments remaining to the end of the term, but apparently we'd need to port the mortgage to do this - where again we run up against the affordability problem.


Can anyone with more expertise than me see a way that we might be able to avoid this? Thanks in advance.

BoGoF

Don't complete the sale till the ERC date is passed?

haras_nosirrah

If you haven't sold yet the only real option is that when you get a buyer say that you can't complete until after the early repayment charge ceases and give them the option as to whether they are prepared to wait

The lender won't waive it

Owlish

BoGoF wrote: »

Don't complete the sale till the ERC date is passed?

Sorry, I should have said - that is an option but we are having to change our kids schools, and as it's going to be hard for them we'd like them to start the new academic year at the new school, rather than at an odd time.



We'd also be worried that we might lose a buyer who might not agree to such a long completion date (brexit etc)....

Owlish

haras_nosirrah wrote: »

If you haven't sold yet the only real option is that when you get a buyer say that you can't complete until after the early repayment charge ceases and give them the option as to whether they are prepared to wait

The lender won't waive it

Thanks for replying. It seems really draconian given that we're so close to the end, and our financial circumstances have changed significantly

glosoli

When was the mortgage originally taken out?

What is the balance of the mortgage, and the likely purchase price of the new house?

If the mortgage predates MMR (April 2014) you may be able to port it despite it currently being unaffordable.

ACG

I took my mortgage out with Virgin 2 years ago (and renewed last month). Looking at the mortgage offer from 2 years ago, my ERC was 2.5% for the duration of the fixed term.

If the plan is to purchase somewhere more affordable, you could port over the maximum you can get? An example - lets assume you have a £200k mortgage now and you can afford £150k, port over the £150k and that will reduce your ERC by £19k. If you then can/want to pay the mortgage down with any excess funds in October, you can do that without any costs.

Aside from putting in a complaint and then taking it to the ombudsman, I am not sure there is much you can do as it is in the paperwork.

getmore4less

What's virgins ERC rate?

Looks like the current one on 5y is 4.5% that's a £550k mortgage

we took out our 5 year fix and we wouldn't be able to re-mortgage or pay the variable rate when it comes to an end in October this year.

Virgin have retention rates around 2% with 1% ERC?

Delay take the tracker and then move paying 1% ERC

Aim to move in the leadup to Xmas.

Rickm85

hi


I have a similar issue we have ahad an offer on our house and offer accepeted on a house we like. due to things moving so fast which we weren't expecting we may have 3 months left on our fixed rate. if we paid the fee it would be £3500 but if we port the mortgage and the payments go up £300 if they allow us to borrow the required amount for the last 3 months its approx. £900 over the last 3 month. does anyone have experience of how likely this is?

Owlish

glosoli wrote: »

When was the mortgage originally taken out?

What is the balance of the mortgage, and the likely purchase price of the new house?

If the mortgage predates MMR (April 2014) you may be able to port it despite it currently being unaffordable.

To answer your questions:
- Sept 14
- £482k
-£400-500k

Owlish

ACG wrote: »

I took my mortgage out with Virgin 2 years ago (and renewed last month). Looking at the mortgage offer from 2 years ago, my ERC was 2.5% for the duration of the fixed term.

If the plan is to purchase somewhere more affordable, you could port over the maximum you can get? An example - lets assume you have a £200k mortgage now and you can afford £150k, port over the £150k and that will reduce your ERC by £19k. If you then can/want to pay the mortgage down with any excess funds in October, you can do that without any costs.

Aside from putting in a complaint and then taking it to the ombudsman, I am not sure there is much you can do as it is in the paperwork.

Mortgage is currently £480k. I think max we'd now get is about £100k. I don't know how it works and whether they'd let me port so much less? But if so, you think that ERC would reduce a bit?