Early redemption penalty

maccp

Hello,

would like some information or advise regarding early redemption penalty,firstly I'll give you our postion.

Sold our house due to exchange next week and complete 20th May we were originally due to exchange and complete December but due to our buyer having problems and various other issues it only now getting sorted. Our offer of mortgage for our new property expires 30th May . Current mortgage is a fixed rate deal which ends 31st May we can not stay with our present lender as they do not offer the type of mortgage (shared ownership) we need, so what this means is we have to pay a penalty for repaying mortgage early.We understand and have no problem with there being a penalty and understand the reason for them. The problem I do have is that when we were told back last year that penalty would approx £2300 now we are completing only a week or so before end of fixed rate term and the penalty is exactly the same, is this right or in fact far? Is there anything we can do to get this reduced?

Any input would but very much appreciated.


P.S. There is no way we can complete after end of May due to our buyer can't do this and that the deal with our new mortgage will no longer be available.

Maccp

maccp

I notice that this thread has been viewed 36 times without reply.Does that mean we have absolutely no chance ?

_Andy_

Depends on lender, some have ERCs that are always a fixed percentage of the loan amount outstanding, some go down over time. I'm guessing yours has a fixed percentage so you'd probably be out of luck.

emmapp2

could you pay off moast of your old morgage leaving say a £1000 then when your fixed term ends pay the rest off then ? Im no expert so maybe one could tell us if this is an option, as im in a simular situation

dmg24

emmapp2 wrote: »

could you pay off moast of your old morgage leaving say a £1000 then when your fixed term ends pay the rest off then ? Im no expert so maybe one could tell us if this is an option, as im in a simular situation

No, you cannot. The mortgage is secured on the property, and as you no longer have the property, you can no longer have the mortgage.

emmapp2

Thanks for that dmg24

JimmyTheWig

Your mortgage lender has given you a fixed rate deal for a certain length of time. This fixed rate will (presumably) have been below their standard variable rate (SVR).
So for all these months you have benefitted from this deal.

In fact, then, the longer into the deal you are the more you have benefitted and the more you have saved than if you were on their SVR.
So you could look at it that you _should_ be paying a _higher_ penalty now!

You could try asking the new mortgage company to keep the offer open for a few more weeks. They might go for it. Are they still doing the mortgage that they offered you? If not, how much more expensive would it be to go onto what they are now offering? Would it be worth this extra expense to avoid the redemption?
I know you said your buyer couldn't wait, either, but is there really no way you can hold things off? Seems such a waste to pay all this money with only a few weeks to go.