Early Repayment Fee

paulos31

I’ve sold my house and my lender is saying that l would still have to pay an ERF, even on the final week of the mortgage on the 25th year that it ends ! Is this normal ? It seem unfair that l’m paying nearly £2,000 after 16 years, but l’d still have to pay this amount in the final year of a 25 year mortgage ! Robbing gits, can anyone advise me that Is common practise ? Cheers 

MWT

Short answer is yes, if that is what you agreed to when taking the mortgage in the first place, but why on earth would you agree a completion date a couple of days the wrong side of the end date for the fee?

penners324

Is it on a fixed rate?

Thrugelmir

paulos31 said:

Robbing gits, can anyone advise me that Is common practise ? 

No ones fault other than yours. Next time read the important documentation. You are simply paying what you agreed to in accepting the product offered. 

Defer the completion date and avoid the ERC. 

julicorn

paulos31 said:

I’ve sold my house and my lender is saying that l would still have to pay an ERF, even on the final week of the mortgage on the 25th year that it ends ! Is this normal ? It seem unfair that l’m paying nearly £2,000 after 16 years, but l’d still have to pay this amount in the final year of a 25 year mortgage ! Robbing gits, can anyone advise me that Is common practise ? Cheers 

In the 'final year' of the mortgage you'd expect the remaining balance to be very low, and the associated ERC to be pretty negligible as a result of that. 
ERCs are also generally not set in relation to the overall mortgage term, but rather the fixed rate period (e.g. your 2 or 5 year fix).

dunstonh

 It seem unfair that l’m paying nearly £2,000 after 16 years,

Except you are not.   ERCs only exist if you are in a deal.  Most deals are bought over a 2-5 year period.   So, you are paying £2000 to exit a deal you bought in the last few years.

Robbing gits,

No they are not.  They are only allowed to impose terms that you agreed to.   

london21

That is a costly mistake. Would have been a phone call or reading the documents to confirm the date you can select to avoid the charge. 

If you have not exchanged can still change it.

paulos31

Thanks for the helpful/unkind/rude advice !
I should have explained, l have a buy to let interest only base rate tracker mortgage.

I realise now that if l managed to sell the house literally a day before the mortgage ended, l’d still pay ERC ! If it wasn’t sold, l’d have to pay back the whole mortgage  amount immediately (which l wouldn’t have) so therefore have the house repossessed.

I was naive, young and foolish to listen and take advice from a broker (whom l’m now making a claim against for wrongful information supplied to me)

At least l’ve sold and made a nice profit and enjoyed regularly 60% extra cash per month leftover from my tenant. 

I got luck, l purchased in 2006, then the interest rates shot down. In hindsight it could’ve gone the other way, if that was the case l’d have been royally screwed for sure !

Have a good day all 

dunstonh

I was naive, young and foolish to listen and take advice from a broker (whom l’m now making a claim against for wrongful information supplied to me)

Buy to lets were unregulated at the time and the broker, if they are still in existence, does not have to consider your complaint.  This is because buy to lets was not considered a consumer transaction but a commercial one.

I realise now that if l managed to sell the house literally a day before the mortgage ended, l’d still pay ERC ! If it wasn’t sold, l’d have to pay back the whole mortgage  amount immediately (which l wouldn’t have) so therefore have the house repossessed.

And in some cases, the lender would suffer a penalty too depending on how they sourced the funds.   That is why ERCs exist.

Many lenders have staff with a higher discretion further up the line but at the end of the day you are relying on their goodwill..   You knew the terms of the contract.  Your solicitor would have gone through the terms of the contract with you.   The contract protects you in some areas and protects them in others.     

Thanks for the helpful/unkind/rude advice !

I don't see anything wrong with any of the responses.  They are not wrapping you up in cotton wool because you are have operated a commercial agreement for over 15 years.  You are not a retail consumer in this respect but a business person.  So, people will respond in way that most business people like to hear it.   Say it as it is.  No fluff or rubbish.

dimbo61

Buying and selling costs and mortgage fees are Tax deductible expenses which can be deducted from the " Profit " you have have when you sold the property 
Less Capital Gains Tax to pay