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Early Repayment Charge (ERCs)

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Hello, 
My wife and I put a reserve down on a plot for a new build in October 2018. 12m later my fixed rate was up and I needed to remortgage.

Having spoke with my bank's mortgage advisor who my mortgage was with, we were told that we were able to either remortgage and port it across to the new property and borrow the additional money once it was complete or stay on variable rate, take the hit but possibly get a better deal further on and then get a fixed rate for the full amount. We decided to fix for 5yrs and then port it across once new build was ready and get a 'bolt on' mortgage. 

Now this week, our new build is  a week away from completion so we applied for a mortgage to get it in place and the bank will not lend us the money as we both have cars on pcp finance and what we didn't realise is that they take into account the entire debt including balloon payments whereas we thought it was just the monthly cost that would be factored so our affordability has roughly halfed and we cannot get a mortgage with current bank. 

Having spoke to a mortgage broker, we've been told that this particular bank will not lend for people buying houses off this particularly builder anyway as they only provide a 6yr architects cert rather than the more common 10yr NHBC cert. He's also said that we can get a mortgage elsewhere no problem based on the details I gave him. 

On to my question- our bank's mortgage advisor was aware when we remortgaged about our cars being on pcp and the location of the new build and who that builder was. A mortgage advisor for a different branch (I had to deal with different branch due to my branch's mortgage advisor being off work for a few months) was also aware as she sent me an email saying what documentation they accept for a mortgage application on a new build and the builder has confirmed that they can provide the requirements.
Neither of the advisors explained that we would struggle getting a mortgage for either/both these reasons yet the independent mortgage broker has told me he had two customers this week alone who were refused by this bank as they don't deal with this builder.
Having only been in new fixed rate for a few months, I would be charged 5% early repayment charge. Is there a way I can fight this as we fixed our mortgage on the basis we could port it over and borrow the additional money for the new property and feel it has been mis-sold, as we weren't warned of potential problems back in October 2019 when we remortgaged?

Thank you. 
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Replies

  • zx81zx81 Forumite
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    No, as nothing has been mis sold.

    Porting a mortgage is always subject to the criteria of the bank at the time, not those in place at the time of taking out the original mortgage.

    If you can get a mortgage elsewhere, pursue that option.
  • jamielutz1987jamielutz1987 Forumite
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    @GixxerDan

    It depends on how they described the "porting" to you. If they wrongly implied that it was something that it was not, you might have a case for a complaint. 

    In any event, it's worth a shot and given that it's not to long ago, they should have the call recordings to go back to.

    Start off with a formal complaint, consider using the MSE resolver tool, it's really good and will help with taking the complaint to the FOS if need be.

    Tbh, it's unlikely that the ERC will be waived but there's no cost involved for you in getting a complaint in.

    Good luck!
  • GixxerDanGixxerDan Forumite
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    zx81 said:
    No, as nothing has been mis sold.

    Porting a mortgage is always subject to the criteria of the bank at the time, not those in place at the time of taking out the original mortgage.

    If you can get a mortgage elsewhere, pursue that option.
    We won't be able to afford the mortgage if we have to pay out multiple thousands in ERCs, though. 
    I take your point regarding the porting. Do I have a case though when they knew we had car finance on pcp and the builder we were dealing with? Their terms haven't changed in either of them instances from what I can gather so does the advisor have a responsibility to make us aware of the consequences and that it could prevent us getting a mortgage? All she asked for when giving us a rough quote for borrowing was how much we paid a month for the cars, not what the balloon payment was etc. 
  • haras_n0sirrahharas_n0sirrah Forumite
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    This is the risk of fixing if you are about to move. There are now a lot of clients who 6 months ago could have ported their mortgages but in the post covid world no longer can (overtime and bonus, self employed or ltv issues)

    Which bank is it? 
    On affordability the monthly payment is factored in but some lenders don't allow more than 50% debt to income ratio- is that the issue?

    I am a mortgage advisor
  • dimbo61dimbo61 Forumite
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    Can you hand the car back under the PCP deals !
    Check into this 
  • edited 4 July at 5:19PM
    ThrugelmirThrugelmir Forumite
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    edited 4 July at 5:19PM
    The key is "criteria at the time".  A very different world now to October 2019. Until the mortgage application is actually made there can be no guarantees. 
    “Buy value, not market trends or the economic outlook. Individual stocks determine the market, not vica versa." - Sir John Templeton
  • haras_n0sirrahharas_n0sirrah Forumite
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    You got your mortgage 5 months BC (before covid)
    We are now 3 months AD (after disaster)
    They are worlds apart. I have a client who is tied into a nationwide mortgage. Had an aip in feb to move. Found house a few weeks ago within previous budget and didn't need to use any of their overtime so thought would be ok. Both clients working throughout and employed. Aip referred and then declined as they took a 3 month mortgage holiday (hindsight is a wonderful thing - they didn't ask me about it they just took it incase and because it was said it wouldn't affect credit score) now have a 7.5k erc
    I am a mortgage advisor
  • dunstonhdunstonh Forumite
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    Porting is always subject to the criteria of the bank at the time of application.   Going into a fixed rate at that point was a foolish thing to do.   However, a rate switch with a bank is not going to be a missale.
    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.
  • GixxerDanGixxerDan Forumite
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    This is the risk of fixing if you are about to move. There are now a lot of clients who 6 months ago could have ported their mortgages but in the post covid world no longer can (overtime and bonus, self employed or ltv issues)

    Which bank is it? 
    On affordability the monthly payment is factored in but some lenders don't allow more than 50% debt to income ratio- is that the issue?

    It's Halifax. The issue isn't with the porting, they are quite happy to let us port it to a new property. It's what we can lend that has significantly reduced as they say we have a lot of debt as our balloon payments etc for the cars are factored in. Our debt to income ratio is below 50% in terms of monthly payments so I can't see that being the reason. The way it was described on the phone (they're not doing face to face meetings) the overall cost of the cars is costed into household debt which I don't understand. I understand them being cautious but after 4yrs if we wanted to pay the car, you either pay the balloon payment in cash or you take out a loan which you have to apply for anyway so if you had a big mortgage you wouldn't be able to get that loan and would just give the car back? 
    If they won't lend the money, I want the freedom to go to somebody who will without being penalised 5% ERC when I personally feel like they had a duty to warn us and in a sense, mis sold us the remortgage last year as we had a quote off them for what it would cost last October (roughly, we didn't go through formal process of AIP etc).
    The aim of the post was to gauge whether we have a case chasing it or not as some things are better discussed with people who can look at it objectively rather than say a family member who has more emotional attachment.
  • GixxerDanGixxerDan Forumite
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    dunstonh said:
    Porting is always subject to the criteria of the bank at the time of application.   Going into a fixed rate at that point was a foolish thing to do.   However, a rate switch with a bank is not going to be a missale.
    I think a few people are getting fixed on the 'porting' aspect. The issue has never been porting the mortgage, we are and always have been able to. The problem is we are unable to attain the additional borrowing required for the new build. When we spoke to Mortgage Advisor in October, they didn't say our overall balance for the cars would count against us. She only asked what we paid a month and she gave us quote on their rates at the time to give us an idea.
    My question is whether they have a responsibility to tell us at the time that the balloon payment etc is factored in calculating your debt and affordability rather than just your monthly payments.
    As our remortgage was due, we were faced with going into a fixed rate or dropping onto the variable until the new house was ready and then looking at the best rates on market. We decided we would 'play safe' and fix as variable rate was much higher (4.4% if I remember correctly vs 1.66% I was on at the time) 
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