ERC - unfair charge?

MC3126

I have a 5yr fixed rate mortgage ending on 30 November with an ERC payable up to expiry. I have a new mortgage offer at a lower rate than currently available which expires on 31 October - so a 1 month gap.

The ERC is £3k and the interest on the mortgage for that one month period is about £400. I appreciate that the ERC is contractual, but spoke to the bank about the fact that this seems unfair given that they will only miss out on £400 of interest. This was rejected.

Any advice about how I could go about trying to resolve this, or whether this is an unfair charge that could be challenged formally?

CSI_Yorkshire

I think you'll be spending effort for no reason.

Just because you think it's a bit expensive doesn't make it an unfair charge or mean they should give you any discount.

RelievedSheff

Can you not get an extension on the offer with the lower rate?

MC3126

RelievedSheff said:

Can you not get an extension on the offer with the lower rate?

Unfortunately not, I have tried that as well.

JM68

As others have indicated, the ERC may seem 'unfair' to you but I think that is just bad luck/timing with the recent rate rises.  ERCs like that are pretty standard in mortgage contracts and I can't see how you would be able to make any case that it's an unfair contract term.

I think you have already tried the only two routes that could 'resolve' this - asking your bank to waive all/part of the ERC and trying to get an extension on the new mortgage offer.

Since you had no joy with either, the best you can probably do now is try and get a different offer that expires after 30 November, then get out a calculator and compare which of the two routes makes the most sense i.e. pay 3k and take the current lower offer, or take the best new offer you can get that starts after 30 Nov.

Exodi

I don't know how to sugarcoat it... you can't just rewrite the rules as they suit you.

I'm not suprised they gave your complaint short shrift. I'd save my energy on this one I'm afraid but if you've got some time spare, I guess you could champion the cause with the FOS (though personally I'd be suprised if they sided with you):

https://www.financial-ombudsman.org.uk/consumers/complaints-can-help/mortgages/early-repayment-charges

kingstreet

Even if you repay one day early the lender's contract with the party who supplied the original rate swap means the ERC has to be paid.

ACG

Your just going to waste a lot of time. These posts crop up periodically. Complaints get made to the lender in question and the ombudsman. The banks can justify these costs as they are costs they incur so the complaints get rejected by the ombudsman. 

You are only saying it is unfair as it no longer suits you. If you really thought it was unfair you presumably would not have agreed to the mortgage when you took it out. Thats you wanting to change the goalposts. 

TheJP

The charge seemed fair when you signed the agreement and took the money. Timings just haven't worked out for you but its not unfair.

chanz4

So if you had savings, and they gave you 400 less would that be okay?