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Early Repayment??

iluvshopping Avatar
8y, 9m agoPosted 8 years, 9 months ago
Hi all,
We are at present selling up home and today had it valued etc and decided
to get down to the nitty gritty as far as costs are concerned. We have only been here 18 months and I nearly fell off the chair to find out that it will cost us almost £6000 to repay mortgage early!
Have been on MSE trying to figure out about repayment charges but am now completely confused. Does this sound like a typical and reasonable charge, and is there any way to reduce this amount?
Thanks in advance, greatly appreciated.
XX
iluvshopping Avatar
8y, 9m agoPosted 8 years, 9 months ago
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#1
Mortgage repayments are based on the full term, so if you pay off early the mortgage company won't get as much return on their investment as they anticipated, so they make up for this by charging early exit fees. Sadly, if you look in the small print of your mortgage agreement, you'll find it's allowed & that you agreed to it.

The earlier you pay back the more the redemption fee.

Are you buying another house? If so, you may be able to persuade your mortgage company to 'carry over' the mortgage to the new property.
#2
Yep this sounds about right.

With my mortgage I have a 5 year fix and if I pay back the whole mortgae in that period I think its a £5k repayment charge.
#3
cis_groupie
Mortgage repayments are based on the full term, so if you pay off early the mortgage company won't get as much return on their investment as they anticipated, so they make up for this by charging early exit fees. Sadly, if you look in the small print of your mortgage agreement, you'll find it's allowed & that you agreed to it.

The earlier you pay back the more the redemption fee.

Are you buying another house? If so, you may be able to persuade your mortgage company to 'carry over' the mortgage to the new property.




Thanks for your reply.

This is what I was afraid of!!
Yes... clear as day now I check the small print!
Re-locating so we were planning to buy somewhere else once we find the
right house in the new area. D'oh!
#4
crow99
Yep this sounds about right.

With my mortgage I have a 5 year fix and if I pay back the whole mortgae in that period I think its a £5k repayment charge.


Yes we are same, 5 yr fixed... Ahhhh, got a good valuation for the house,
knew there had to be a sting in the tail somewhere!:)
#5
stupid question but if you sell will you not need a mortgage for the new house?

Could you not see about switching the mortgage to the new house

ps this may be totally wrong just a suggestion
#6
allstar2
stupid question but if you sell will you not need a mortgage for the new house?

Could you not see about switching the mortgage to the new house

ps this may be totally wrong just a suggestion


We want to rent for about 6 months because we are moving to Ireland. We need to decide where best to buy and dont want to rush into buying as this is what happened where we currently live and although its a lovely house our hearts are not in it, I think this is down to the fact that we rushed to buy it.
I dont really know anything about how banks work, we do intend to stay with them for our future buy but realistically think by the time we have moved and found somewhere where we both like it will be at least 6 months.
My brain hurts!!:)
banned#7
Speak with your mortgage company as if you are moving then you can probably keep the exisiting mortgage so minimal fees.
#8
Some companies will keep the option open for a set period(1 Year).

It depends on the mortgage company and the product you have bought.
#9
Im in the same position - apparently I can pay off 10% each year without financial penalty - thats a year jan - dec - not april - march!
#10
What about renting your house for the next 6 months. Most lenders will agree to you doing that and the rental may go a long way to paying your mortgage. Then when you are settled and want to buy, you can sell the house and assuming the lender is in Ireland (most of the big ones in the North as part of UK) although Halifax, Rbs in the South, you could transfer to your new home and hopefully not have the penalty to pay.
#11
Cheers All,
Feelin much better!
Think the best option is talk to them about what Saint said
and see if they can keep it open for a while.
Thanks for the info, its very daunting going to
speak to these people when you are confused but seems the more you read
up on it the more confusing it gets!
:)
#12
As you get nearer the end of you repayment charge period, the amount of repayment charge SHOULD decrease, if you have a decent lender that is. If there is no provision in your agreement about this, ask for a profit and loss and you'll get a reduction on the repayment charge as there is no justification for them to charge £5k at the start of the product and keep it at £5k if you are in the last year of your product, for example. Also, if it was in the last 3 months of the charge, if the customer kicked up a fuss we waived it for changing rate/moving

Where I used to work also had the option of basically picking up your entire mortgage package and putting it on a new property - same terms and conditions/rates/expiry dates etc. If sale and completion were not simultanious, the offer was held open for 6 months.

If your lender tries to fob you off and be all unhelpful, then if you get the name of the head of the mortgage department, write and explain that you know other lenders try to help with people moving that are in an early repayment period, and that if they are so unflexible, you'll be taking your business elsewhere when your repayment charge expires, you should get some kind of offer back and if you don't, then it's not really a lender you want to be with :thumbsup:
#13
[QUOTE=

If your lender tries to fob you off and be all unhelpful, then if you get the name of the head of the mortgage department, write and explain that you know other lenders try to help with people moving that are in an early repayment period, and that if they are so unflexible, you'll be taking your business elsewhere when your repayment charge expires, you should get some kind of offer back and if you don't, then it's not really a lender you want to be with :thumbsup:[/QUOTE]

Cheers. :thumbsup:
#14
On my mortgage (3 year stepped fixed) the early repayment charge is around £3500 for the first year £2800 for the second and around £2200. In the 3 years I can pay off 10% a year.
banned#15
As a computer programmer, I can state that sometimes these early repayments mean nothing to the banks systems. I was tied in to a 5 year cap where early repayments were severely penalised. I overpaid by £10 one month after year one but wasn't penalised so proceeded to pay off the entire mortgage in year two without any penalty (Nationwide B/S)

Worth a try for some.

just look at the CSA system:-

Cost £500,000,000

benefits:- for every £1 collected, it cost £2 in admin fees.

most government and banking systems are farcial, the worst example being the inland revenue.
#16
My early repayment charges do go down as time goes on but the amount I would still be paying in interest over that period (even with investing the money into an account to offset it) still makes more sense to bite the bullet and pay it off and pay the fees. but i'll keep my fingers crossed the system decides I owe less in repayment fees than i do!
banned#17
Aquatic;1607075
My early repayment charges do go down as time goes on but the amount I would still be paying in interest over that period (even with investing the money into an account to offset it) still makes more sense to bite the bullet and pay it off and pay the fees. but i'll keep my fingers crossed the system decides I owe less in repayment fees than i do!

You must have a very high mortgage rate then as you can get 6.1% on a savings account.
#18
csiman
You must have a very high mortgage rate then as you can get 6.1% on a savings account.


With tax taken off the savings it'd be more like 4.75% wouldn't it?
banned#19
Benjimoron;1607321
With tax taken off the savings it'd be more like 4.75% wouldn't it?

Not in an ISA it wouldnt or if you are registered for non-payment of tax. Even so, 4.75% return may be a lot better than paying the mortgage early exit fees of £6000 as in the OPs case.
#20
csiman
Not in an ISA it wouldnt or if you are registered for non-payment of tax. Even so, 4.75% return may be a lot better than paying the mortgage early exit fees of £6000 as in the OPs case.


Yeah true, tbh I haven't read the whole thread. Don't pay £6000 exit fees, still in a deal term at the moment I assume?
#21
Yep... still battling to get out without paying so much!!
Sending OH to grovel to Bank! lol

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