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Will lenders waive ERC given increase in rates?
steve866
Posts: 546 Forumite
Hi all,
A bit of a hypothetical one based on a conversation with a friend. I have a relatively large mortgage fixed for another 4 years at 2.1%. I said to my friend that "I can't sell my property for 4 years because the ERC is 5%". He was convinced that the lender would waive the ERC given my rate is much lower than their current rates.
From my research, it doesn't look like this is happening at the moment. Did this sort of thing used to happen prior to the low levels from 2008?
A bit of a hypothetical one based on a conversation with a friend. I have a relatively large mortgage fixed for another 4 years at 2.1%. I said to my friend that "I can't sell my property for 4 years because the ERC is 5%". He was convinced that the lender would waive the ERC given my rate is much lower than their current rates.
From my research, it doesn't look like this is happening at the moment. Did this sort of thing used to happen prior to the low levels from 2008?
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Comments
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No, they would not do this. They borrowed the money for your mortgage when the rates were cheap so it makes no difference to them if your rate is low or not, they are not out of pocket.
I recently read on here someone's house burnt down and got demolished and they still have to pay the ERC.3 -
No they wont waive the ERCs.
Banks do everything in bulk, you are just one mortgage. So they cant then try to reallocate that money and lend it out at a higher rate.I am a Mortgage AdviserYou should note that this site doesn't check my status as a mortgage adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.3 -
I thought this would be the case. Having said that I have ready stories of bank trying to incentive borrowers out of certain deals (trackers below base rate around 2008 for example).0
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Trackers are not funded by the investors/money markets.steve866 said:I thought this would be the case. Having said that I have ready stories of bank trying to incentive borrowers out of certain deals (trackers below base rate around 2008 for example).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.3 -
We are currently selling our house and are being stung for our ERC of 5%. Sucks to be honest but we factored it into our finances.Our 2.06% fixed rate ends in April 2027 so it was a choice of sell now while prices are relatively good, or take the risk in 4 years time just to save £5k.0
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It may "suck", but it is what you signed up to when you took out the mortgage.2
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100% which is why I said we factored it into our finances when we put the house up for sale. ie we knew whatever offer we accepted, we’d be giving up £5k right off the bat.RelievedSheff said:It may "suck", but it is what you signed up to when you took out the mortgage.0 -
You only pay the ERC if you redeem the mortgage but not if you port it across to the new property and take a top up mortgage from the same lender and try to align the end dates of these products as best you can.gazfocus said:
100% which is why I said we factored it into our finances when we put the house up for sale. ie we knew whatever offer we accepted, we’d be giving up £5k right off the bat.RelievedSheff said:It may "suck", but it is what you signed up to when you took out the mortgage.1 -
Can you not port the mortgage to your new property?1
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