Early settlement charge 19 August 2021 at 2:53PM in Reclaiming mortgage fees, council tax, etc 11 replies 291 views

Aligbomb87

Hi all.  Hoping for some input here.  Tied in on current mortgage for another 3 years but had an amazing offer on the house with substantial equity so decided to sell.  Found a house that is the same i paid for my current and approached my lender with the proposal of porting the mortgage exactly as it is with me paying the difference to make it so.  This new home reduces my partners daily commute to work from 1 hour 30 to 20 minutes daily so would have huge impacts on my affordability going forward along with improving reducing risks for again I quote no additional borrowing. This was refused on affordability due to credit card funded wedding expenses forcing me to get the mortgage with another provider on a better rate. 

My question is, as my lender put me in a position where I either give them some of the equity to get a smaller mortgage with them or pay the £6k early settlement fee to go with someone else.  They are actively preventing me from bettering my financial position despite being aware to all of this. The equity alone is 40k and thats life changing for me.  I have asked them to surrender the equity and they have refused.  

Any thoughts please peeps? I am aware I signed the contract but am asking purely from an ethical standpoint based on how much they dont make sense based on another lender giving me exactly what i want. 

Thrugelmir

Porting a mortgage has always been subject to the lenders current underwriting criteria. The ERC will stand if you obtain the new mortgage elsewhere. 

Nearlyold

Am I right in thinking you're not planning to use the £40k equity as payment towards the new property but rather use it for some other unspecified purpose? 

I would have thought having a £40K smaller mortgage than you had previously was bettering your financial position.

Edi81

Nothing to do with ethics. The lender will have entered into a contract in order to give you funding at a fixed rate. 

They are completely correct to charge you for breaking it as they would be charged. 

SpiderLegs

I suppose we could flip this one on its head a bit, and suggest that the credit card company should write off your wedding debts because by lending you some money that you asked for and agreed to pay back, they have actively prevented you from improving your financial situation.


I’m thinking you should try this line out and come let us know how you get on.

Aligbomb87

Hi all.  Thanks for your comments.  To answer in order;

Thrugelmir - I appreciate the direct answer but can you offer an opinion on my prisoner angle? I am not leaving through my own choice now purely because they would not accept my exact same mortgage terms despite my improved financial gain through moving.  I will endure hardship by staying and I see this as a real heartless move by the current lender.  I thought they had a responsibility to help customers improve their financial situation when it clearly benefits them through reduced risk and in this case extra business through a savings account with substantial equity?

NearlyOld - Yes I am using some of my equity towards the purchase of my new property and you misunderstand.  I wont have a 40k smaller mortgage and even if I did it wouldn’t be because of what my lender did because I can only achieve this through leaving and acquiring a mortgage elsewhere hence my issue. 

Edi81 - May I ask why ethics don’t come into this? I have made it clear that they are making me leave as if i stay i pay them 6k for a smaller mortgage and if i leave i pay them 6k.  Either way they have it tied up in a neat little bow and it appears as though a customer and consumer has zero rights and is at the mercy of the lender regardless. 

SpiderLegs - I see where you are coming from but I used those credit facilities with good intentions and fully intend to pay it all back.  My issue is totally with my lender winning from all angles and forcing me to give £6k even if i stay. My understanding is that a contract is a commitment but when customer rights are considered then it cannot benefit one party 100% in any circumstance where a customer can argue foul play which I am doing. 

Apologies if my wording as come across as harsh or abrupt but am really annoyed at how all this seems to favour the wealthy corporate machine.  

Thrugelmir

Aligbomb87 said:

I will endure hardship by staying and I see this as a real heartless move by the current lender.  I thought they had a responsibility to help customers improve their financial situation when it clearly benefits them through reduced risk and in this case extra business through a savings account with substantial equity?

You spent money you didn't have on your wedding. Your choice not the lenders. You made your financial position worse. Little point in attempting to deflect attention elsewhere.

I'd suggest the Debt Free Wannabe boards maybe worth a visit. As you need to help yourself first in order for others to see that you've changed your ways permanently. 

SpiderLegs

Aligbomb87 said:

SpiderLegs - I see where you are coming from but I used those credit facilities with good intentions and fully intend to pay it all back.  My issue is totally with my lender winning from all angles and forcing me to give £6k even if i stay. My understanding is that a contract is a commitment but when customer rights are considered then it cannot benefit one party 100% in any circumstance where a customer can argue foul play which I am doing. 

Why do you have to pay them 6k even if you stay?

I don’t think you quite understand. Charging you the ERC is not them ‘winning’, it is a cost that they are passing on to you. It isn’t going towards those nasty banker’s 2021 bonus and they are benefitting by 0% not 100%.

Ethically, who do you expect to pay this? All the other customers?

There are odd occasions where some people have had the cost waived, but that will entirely depend on the specific circumstances of the loan, lender, term…etc. You might get lucky, but with three years left it’s not likely.

Aligbomb87

Thrugelmir I am not blaming my lender for the wedding money spent.  That wedding money was spent before I knew anything about the equity in my home. At 34 i want to be married and have kids like a regular person and time is running out for that so the credit card was the last desperate avenue for that. 

What I am asking is simply; I failed the affordability check because of this credit card spend and the lenders attitude was your risk is too high.  I totally get that I really do.  What I want to know is, with the bigger picture is that if they did grant the mortgage port, I would have improved affordability through reduced outgoings on work commutes and wear and tear ( and this is considerable from 1:30 a day to 20 mins a day) and on top of this freed up finance with which I can address the credit cards I would also have equity left over with which I could also either pay off the credit cards in one hit or open a savings account with my lender where they would benefit from the business and transaction. This scenario here paints a picture of both parties benefitting from this transaction.  Now they said no to that and pushed me to another lender to pursue this opportunity at the cost of the ESC which I am now saying should be null and void as it was the lender that pushed me into this decision as it was worse for me financially to stay in this house and I cannot win any logical argument with anybody if I am going to make decisions that paint me as someone who doesnt try to improve my financial situation.  All of this could have been avoided if my current lender did not have a “computer says no” attitude. My new lender initially had the affordability concerns but after seeing the bigger picture totally saw my point of view. Why one lender can and one lender wont yet im here feeling like a villain purely because I want to make the best of my situation? 

Aligbomb87

Spiderlegs.  I will have to pay more than 6k to stay because I owe 120k on the mortgage and they wanted to lower that despite my good history by moving.  But by staying I am fine. Which makes no sense because if you read my full story I will have an improved situation.  

To be honest you seem fully sympathetic with the lender.  I shouldn’t have to pay the early settlement charge because I am being bullied into leaving to find a better deal. Of course I do not expect the other consumers to pay it.  And you speak as if this ESC is a genuine charge.  It is not.  It was created as part of my lending agreement and has no bearing on anyone else so please do not make out that it does. 

Aligbomb87

I have had an epiphany.  Apologies for any offence caused.  I appreciate all your input but I just felt misunderstood and got frustrated because my point of view didn’t feel as though it was coming across.  I am at peace with the situation now as I see it from a new angle and can see that I am not losing in any eventuality other than by not selling. 

Thanks everyone for helping me see and again i apologise if I bit more than I should.  I wear my heart on my sleeve as you can probably tell 😂