Redemption penalties

clkiely

Can anyone advise me. I am stuck in the worst mortgage in the world and I want out but it will currently cost me around £6,500 to get out before November 2006.

Is there another lender that might add the redemption penalty to a mortgage so I can afford to change lenders??

Does anyone have any good ideas or advice?

herbiesjp

Most will providing there is affordability all round

Richie(UK)

clkiely wrote:

Can anyone advise me. I am stuck in the worst mortgage in the world and I want out but it will currently cost me around £6,500 to get out before November 2006.

Is there another lender that might add the redemption penalty to a mortgage so I can afford to change lenders??

Does anyone have any good ideas or advice?

Hi,

How much will it cost you to stay with the existing mortgage until the end of the tie-in period? £6,500 is a fair amount to make up between now and November 2006. Make sure your sums add-up before you move

Rob_B_8

yep, makes sense, if the higher charges of your current mortgage are less than £6500 then stay until nov 06 THEN move (assuming there are no charges after that date)

Scott

I very much doubt that moving makes financial sense if the ERC is that high and the remaining period is that low.

What exactly is so bad about your current mortgage?

clkiely

It is Birmingham Midshires Sub prime which had a discount period that has finished and we are on, I think it is 6.7%, a terrible rate. We are currently paying £865.00 a month interest only on a property that is a new build and has lost value, currently only worth @ 162,000.00, mortgage outstanding currently 155,000.

Ian_W

Stand to be corrected by any lurking IFA's/Mortgage Brokers but it still doesn't make any financial sense IMO for you to move.

1. Best deals are at circa 4.2% [and even they may have gone up a bit in the last couple of days] and would give monthly repayments of £542 on £155k borrowed = saving of 323pm x 15 = £4845 less fees payable to new lender, giving you a saving of just over £4k. That saving is a lot less than the £6.5k penalty, without even adding the penalty to the sum borrowed!!
2. Add the penalty to the mortgage and on your own valuation you are virtually at 100% mortgage - not even sure best deals are available at such a high LTV figure.
3. Don't understand all the circs about "sub prime" but if it's because of credit history problems, same comments about availability of best deals may also apply.

Sorry, it may not be the answer you want, and hopefully an expert will happen along and tell you I'm talking out of my backside, but it appears to me what you've got is the best you're going to get until November 2006.

If your current monthly payments are causing problems and you need to lower them to keep afloat you do need expert advice.