Avoiding mortgage exit fees?

sab478

We are redeeming our mortgage with Leeds building society at the end of a 5 year fixed rate term. On the redemption statement is a £199 exit fee. When I queried what this is I was told it's because we are leaving before the end of the 30 year term of the mortgage.

Whilst I suspect this is somewhere in the original small print, I did wonder if we pay off the total minus £1 whether we can avoid the £199 fee. The interest on £1 over the next 25 years would be negligible even on their standard variable rate (and it would cost the Leeds more in anon and sending out statements etc. than we'd pay in interest! ). Has anyone else tried this?

sab478

In admin, not anon! Autocorrect 😞

400ixl

Does your contract allow you to pay down tho that amount without penalty? Many have a clause you can overpay by 10% per year without penalty.

Seems like a lot of effort to avoid a £199 fee

sab478

It's the end of the 5 year fixed term, so no early repayment fees apply.

ACG

The fee is charged to remove their name from the land registry. So even in 30 years it would still be due, not sure why you have been told otherwise. It might even be higher in 30 years - some lenders reserve the right to review the fee - whether or not Leeds do I am unsure and will depend on your contract.

It will probably be in section 4 of your mortgage offer. 

simon_or

I think this is normal, some banks charge zero, some even as much as £250. It will be there on your mortgage offer and I don't think they'll waive it. If it's not on your mortgage offer then you may have cause for complaint.

sab478

ACG said:

The fee is charged to remove their name from the land registry. So even in 30 years it would still be due, not sure why you have been told otherwise. It might even be higher in 30 years - some lenders reserve the right to review the fee - whether or not Leeds do I am unsure and will depend on your contract.

It will probably be in section 4 of your mortgage offer. 

Thanks. That makes sense about removing their name from the land registry title. Hadn't thought about that, and definitely with doing. I'll pay the fee and close the account as it's tidier, but had wondered if it was a loophole. Thanks for all the comments. Much appreciated.

TrickyDicky101

Nationwide who I'm with charge £65 for account closure (so not a great deal) but if the mortgage is fully redeemed within 10 years of the original maturity date they waive the fee.  Hence, I have almost fully paid down my mortgage but won't bother paying it off completely because in a few years time this fee will disappear.