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Early Redemption Penalties
Gurdy
Posts: 1 Newbie
Are they lawful?
My mortgage company are going to charge me over £2,600 when I pay off my mortgage due to selling my flat. This is a huge chuck of money to me. Is there anything I can do to avoid paying it?
My mortgage company are going to charge me over £2,600 when I pay off my mortgage due to selling my flat. This is a huge chuck of money to me. Is there anything I can do to avoid paying it?
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Comments
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The answer to the first question is yes of course.
The lender gave you a preferentail rate. The ERC is a feature of the rate. Lenders do not lend money for free, so they have to make sure that they make the money they need to from giving you a rate lower than thier SVR. They do this by tieing you in for a period of time that means they will make a profit. If you left before this time, they would not make a profit, and so reclaim the losses in the form of the ERC, thus enabling them to make a profit.
You were happy to do this when you took the mortgage out as you signed the mortgage deed, thus accepting the terms of the offer.
The answer to your second question is no.
Compensation culture gone mad!0 -
My mortgage company are going to charge me over £2,600 when I pay off my mortgage due to selling my flat. This is a huge chuck of money to me. Is there anything I can do to avoid paying it?
Yes, don't sell the flat.Hi, we’ve had to remove your signature. If you’re not sure why please read the forum rules or email the forum team if you’re still unsure - MSE ForumTeam0 -
Are they lawful?
My mortgage company are going to charge me over £2,600 when I pay off my mortgage due to selling my flat. This is a huge chuck of money to me. Is there anything I can do to avoid paying it?
First of all its not a penalty. Its a charge.
Its a charge that you agreed to when you took out the mortgage in return for getting a cheaper deal than the standard variable rate. The charge is activated only if you break the contract.
Only way to avoid is not to break the contract.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.0 -
LOL good point !!!!!!0
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