Trying to calculate redemption penalty please
Options
jolester
Posts: 331 Forumite
Hi
I am likely to be changing my mortgage shortly and I am aware that I will incur a fee for closing this mortgage early, I am not sure exactly what the following means though and I'd really appreciate if someone could clarify for me as I'm trying to calculate exactly what the penalty will be. I have contacted my mortgage co for the figure but they will only send this is writing in 3-5 days and I could do with trying to work it out roughly before then !
Early repayment charge
From 1st October 2017 - 3.00% of the amount repaid, plus fees, plus cashback of £250. Cash example £6080.00
Does the above mean that the redemption penalty is 3% of the amount that has already been paid (which isn't a lot) plus the £250 cashback incentive, plus a lot of fees which would make the redemption penalty £6080?
Or, 3% of the amount outstanding mortgage which WOULD be repaid upon taking a mortgage out with a different lender?
(I am assuming that the cash example is them telling me what I should expect the early repayment penalty to be?)
Thanks for any help you can offer
I am likely to be changing my mortgage shortly and I am aware that I will incur a fee for closing this mortgage early, I am not sure exactly what the following means though and I'd really appreciate if someone could clarify for me as I'm trying to calculate exactly what the penalty will be. I have contacted my mortgage co for the figure but they will only send this is writing in 3-5 days and I could do with trying to work it out roughly before then !
Early repayment charge
From 1st October 2017 - 3.00% of the amount repaid, plus fees, plus cashback of £250. Cash example £6080.00
Does the above mean that the redemption penalty is 3% of the amount that has already been paid (which isn't a lot) plus the £250 cashback incentive, plus a lot of fees which would make the redemption penalty £6080?
Or, 3% of the amount outstanding mortgage which WOULD be repaid upon taking a mortgage out with a different lender?
(I am assuming that the cash example is them telling me what I should expect the early repayment penalty to be?)
Thanks for any help you can offer
0
Comments
-
3% of the amount you are repaying early (i.e. the outstanding mortgage amount), + the fees etc.0
-
The back question is why the need to change?0
-
getmore4less wrote: »The back question is why the need to change?
Hi,
I have already been to my current mortgage lender about increasing funds to cover the new property being purchased, they would do this and my new monthly mortgage amount would be £2362.00, I have seen a mortgage advisor and they can get me the required mortgage amount with a different lender with a monthly payment of £1484.790 -
the monthly payment is not the critical bit of information to making the decision to change.
It is easy to produce a lower payment by just increasing the term.
What are the details of the 2 deals on offer. (amounts, rate. terms payment) don't forget to factor the fees and ERC.0 -
jolester wrote:Hi,
I have already been to my current mortgage lender about increasing funds to cover the new property being purchased, they would do this and my new monthly mortgage amount would be £2362.00, I have seen a mortgage advisor and they can get me the required mortgage amount with a different lender with a monthly payment of £1484.79
Careful here. The difference on rate to save £878 pm on the payment without changing anything else would need to be 5% and that is not possible.
You are not comparing like with like.
Don't pay £6,000 in fees to make a saving that isn't a saving.I am a Mortgage Broker
You should note that this site doesn't check my status as a Mortgage Broker, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.0 -
getmore4less wrote: »the monthly payment is not the critical bit of information to making the decision to change.
It is easy to produce a lower payment by just increasing the term.
What are the details of the 2 deals on offer. (amounts, rate. terms payment) don't forget to factor the fees and ERC.
Thanks for your advice
My current lender has openly admitted that their rate for additional borrowing is greatly higher than my current rate with them, their additional borrowing rate is 4.49% variable, for the same amount of borrowing over (edited from the same length of time) an additional three years I can get a far better fixed rate with a different lender0 -
I would crunch the numbers to check.
Could still be worth paying the higher rate till the ERC stops.0 -
The reason I say this is the broker should have done this and explained it to you.
To do the numbers they would need to have estimated the ERC+ other costs to show you the savings.0 -
jolester wrote:Thanks for your advice
My current lender has openly admitted that their rate for additional borrowing is greatly higher than my current rate with them, their additional borrowing rate is 4.49% variable, for the same amount of borrowing over (edited from the same length of time) an additional three years I can get a far better fixed rate with a different lender
How much do you owe and how much extra are you borrowing.I am a Mortgage Broker
You should note that this site doesn't check my status as a Mortgage Broker, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.0
This discussion has been closed.
Categories
- All Categories
- 343.2K Banking & Borrowing
- 250.1K Reduce Debt & Boost Income
- 449.7K Spending & Discounts
- 235.3K Work, Benefits & Business
- 608K Mortgages, Homes & Bills
- 173.1K Life & Family
- 247.9K Travel & Transport
- 1.5M Hobbies & Leisure
- 15.9K Discuss & Feedback
- 15.1K Coronavirus Support Boards