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

Owlish

getmore4less wrote: »

What's virgins ERC rate?

5% of the outstanding loan if the mortgage is repaid before 01 November 2019

getmore4less wrote: »

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.

Sorry, I don't know what retention rates are. The tracker repayments aren't affordable, and not sure we can hang on that long.

glosoli

Owlish wrote: »

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

Is that when you took the mortgage out originally with Virgin on your current property, or is that when you did a product switch with Virgin onto your current rate?

ViolaLass

On our last mortgage, I was able to switch our fixed rate to a tracker once the fix had less than 3 months to go. We sold two months before the end of the fix and avoided the ERC by switching the week before.

Might you be able to do this?

dunstonh

Owlish wrote: »

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

Maybe it would help if you understood the funding.

The lender has obtained the funds on a terms that it has to stick to. It could be from savers in fixed term deposits or via the money markets. If the lender repays the money earlier as you have it means the lender has to pay a charge to the investors or suffer the loss itself.

So, either you pay it or you are asking other borrowers to pay it for you. Which is the fairest?

getmore4less

Owlish wrote: »

5% of the outstanding loan if the mortgage is repaid before 01 November 2019

Sorry, I don't know what retention rates are. The tracker repayments aren't affordable, and not sure we can hang on that long.

retention rate are those your cuurent lender has for a product switch without any checks.

Virgin have a 2y tracker or 2y fix around 2% with 1% ERC that will save you 4/5 of you ERC.

what's the current fix rate?

AnotherJoe

Kids are very adaptable. They will be fine. Plenty of kids move schools outside the first day of term without any drama.
Save £25k by moving after the ERC and take them to Disneyland as recompense.

ACG

Owlish wrote: »

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?

I think so, you would need to check with them.

You would effectively be paying the ERC on £380k rather than £480k. Not a massive saving in the grand scheme of things but every little helps. No harm in asking.

Thrugelmir

Owlish wrote: »

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

You would be up in arms if Virgin increased your interest rate by 2% overnight. Which of course you cannot. As both parties are bound by the terms of the contract that's been signed.

Bottom line is they are we are to take responsibility for our own financial decisions. Life is a matter of choice.

Lenders now do have a duty of care towards their customers. Worth asking if they'll port the mortgage (the bare minimum you require ) to enable you to downsize. This would at least reduce the ERC.

Typhoon2000

If your House is just on the market, it is unlikely you will be able to complete on the sale and your new property before September when school starts. You will either have to stay put or rent somewhere else whilst still paying your mortgage payment. If completion is due in say October, I am sure you can stretch it out till November.

Thrugelmir

Typhoon2000 wrote: »

If completion is due in say October, I am sure you can stretch it out till November.

I'd assume that current financial constraints makes this not possible without the mortgage falling into arrears. Might save the ERC however would rack up considerable interest and admin charges.