Early Repayment Charges

CTPW62

We're in Year 2 of a 7 year fixed term deal and are about to sell and downsize. There won't be any mortgage required on the new property. Barclays are going to penalise us and charge the full ERC (circa £7k) - we have challenged but they are not prepared to negotiate, despite having been a Barclays customer for 40 years. Does anyone have any advice around how we might be able to negotiate a lower settlement?

[Deleted User]

Not if the ERC is the one that you agreed to in the contract.

ERCs are based on the costs of early redemption, not previous custom with other areas of the bank.

comeandgo

I don’t think you can.  You are breaking a contract which will cost them a lot of money which is why they tied you in to pay the £7,000.

fewcloudy

Not a chance. And this is not just a Barclays thing; any other bank would do the same.
They borrowed the money to lend to you and face the same penalties for early redemption as you do.

Snookie12cat

That's what an ERC is. You pay off loan early you pay the fee.. No negotiation to be had.

MWT

CTPW62 said:

We're in Year 2 of a 7 year fixed term deal and are about to sell and downsize. There won't be any mortgage required on the new property. Barclays are going to penalise us and charge the full ERC (circa £7k) - we have challenged but they are not prepared to negotiate...

What was the basis of your challenge?

These days the banks are usually very good at clearly communicating the ERC when you agree to a new fixed term, was that not done in your case?

 

dimbo61

Could you look at paying off 10% of the balance now ?
Check if you pay the ERC based on the outstanding balance owed.
It might help a little.

Thrugelmir

Overpay the mortgage by whatever you can afford and within the limits allowed. Prior to selling the property. As your only option is to mitigate the impact of the ERC. 

Suggest you read the product literature that came with the mortgage offer. Before complaining further. As you've agreed to these contractual terms in accepting the product. 

Sistergold

There is really nothing to complain about or challenge. Read you t&cs. They gave you a good deal based on the how long you were taking product for, now you have changed your mind. The penalty should not have come as a surprise really? 

dunstonh

Barclays are going to penalise us and charge the full ERC (circa £7k) - we have challenged but they are not prepared to negotiate, despite having been a Barclays customer for 40 years.

Your time as a current account customers does not matter.   You entered into a contract and agreed terms.   So, why should they suffer a financial loss?   

Would you consider it fair if your charges were higher because you were paying for other borrowers ignoring their contract terms?

ERCs exist for good reason.   They have been well documented for nearly two decades.    Getting out of them is very hard nowadays.

Noneforit999

Its not a settlement, its a contractual percentage based on how much you owe.

I would be stunned if they even entertain negotiating the amount with you. 

As said above, if you have money in the bank you can overpay the mortgage by the allowed amount in the timeframe you have to reduce down the amount of ERC.