Early Redemption Fees

Hi Everyone, after some help / guidance?
I have lost my job due to Covid19 and during this time my wife has suffered with a cancer diagnosis. Because of these major issues we have decided to make out lives a bit easier and sell up the forever home and move into something smaller giving us the option to live mortgage free. We have sold our house and found a new house and we are very happy with the outcome (and with the savings we'll make on the Stamp Duty breaks). I contacted the bank to alert them to our plans to sell up and go mortgage free and they told me I had an £11k ERC to pay, now I knew there would be a charge but i hadn't banked on that much. I asked them for some help in the form of a deferral or reduction and every Dept I spoke to has said "no". I have had the final letter to confirm this today and I am about the write to the Financial Ombudsman but I wondered if anyone else had any ideas on how to tackle this?
Thanks in advance, Rob


  • [Deleted User]
    [Deleted User] Posts: 35,242 Forumite
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    The only way to tackle it is to pay it, or not to move.

    FOS will just bat it back.
  • dunstonh
    dunstonh Posts: 116,231 Forumite
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    edited 16 July 2020 at 1:53PM
     but I wondered if anyone else had any ideas on how to tackle this?

    Stay in the same home and wait until you are out of the tie in period or pay it.

    and I am about the write to the Financial Ombudsman 

    Who will almost certainly reject your complaint as ERCs are considered fair and exist for good reason.   

    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • haras_n0sirrah
    haras_n0sirrah Posts: 1,339 Forumite
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    how long is left on your tie in
    Unfortunately for you while I can sympathise with you the lender has done nothing wrong.
    You signed a contract agreeing to a fixed rate until x date
    By paying off the mortgage early you are breaking the contract and they are entitled to the penalties that were in the contract you agreed to
    Your simple options are to stay put until no longer tied in or pay the penalty to move. The ombudsman will do nothing and it would just be a waste of your energy at what sounds like a difficult time. Early repayment charges are perfectly transparent and have been deemed legal 
  • Thrugelmir
    Thrugelmir Posts: 89,546 Forumite
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    Pay the ERC and move on with your lives. As you've no grounds for a reduction/deferral in the charge. 
  • Carrot007
    Carrot007 Posts: 4,534 Forumite
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    How long have you been there and how long was your deal. If you were on the edge of a year you should have waited as the ERC usually reduces on it.

    You agreed to an ERC or a better rate. Your complaint is just pushing up costs for everyone. Yes sometimes life sucks. Fight things that are wrong.
  • Thanks everyone, I thought that was the case but with the current situation i thought there may be some leniency, esp as we are doing this to reduce this risk of arrears and failed payments which neither us or the bank want!! I guess not :(
  • [Deleted User]
    [Deleted User] Posts: 35,242 Forumite
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    They don't want arrears, but equally with the current situation, they can't afford just to hand money over to everyone who wants it.
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