Mortgage redemption figure ?
Discussion
Are there any rules for how these are calculated or can the mortgage provider just pluck the figures out of their arse ?
I am on a fixed mortgage 5 years but only has 1 year 4 months to run. Say I owe 140k I’ve been advised I need to pay an extra £8999 to clear it .
Interest is about £200 a month so 16 x 200=£3200 plus they would have the benifit of not lending me money and I can get 1.5% interest with ease . So they want 3x the interest they are actually due . Could they say you owe us £140k but the redemption is £1.4million just because . I assumed worst case I would have to pay the interest they would have got if I let it fun the term !
I am on a fixed mortgage 5 years but only has 1 year 4 months to run. Say I owe 140k I’ve been advised I need to pay an extra £8999 to clear it .
Interest is about £200 a month so 16 x 200=£3200 plus they would have the benifit of not lending me money and I can get 1.5% interest with ease . So they want 3x the interest they are actually due . Could they say you owe us £140k but the redemption is £1.4million just because . I assumed worst case I would have to pay the interest they would have got if I let it fun the term !
I absolutely understand there are early repayment charges , and I have no doubt they are buried somewhere in the 30 pages of paperwork I signed and I’m on the hook for them no matter what. What surprises me is they want 300% of what they would be entitled if the mortgage ran its course. It’s not a big deal , i can wait 16 months but I thought they would just accept all that money plus all the interest . Then they have all the money they would have made in interest (yay) plus 140k to lend out to the next person (yay) .
I’m getting over £100 a month in interest on the cash and paying out £200 so it’s only going to cost me £1600 . Just physiologically i want to be mortgage free , not worth £10k to me
I’m getting over £100 a month in interest on the cash and paying out £200 so it’s only going to cost me £1600 . Just physiologically i want to be mortgage free , not worth £10k to me
matjk said:
I absolutely understand there are early repayment charges , and I have no doubt they are buried somewhere in the 30 pages of paperwork I signed and I’m on the hook for them no matter what. What surprises me is they want 300% of what they would be entitled if the mortgage ran its course. It’s not a big deal , i can wait 16 months but I thought they would just accept all that money plus all the interest . Then they have all the money they would have made in interest (yay) plus 140k to lend out to the next person (yay) .
I’m getting over £100 a month in interest on the cash and paying out £200 so it’s only going to cost me £1600 . Just physiologically i want to be mortgage free , not worth £10k to me
Because it's a deterrent........they want you to keep the mortgage for the fixed rate period......but will happy take a hefty chunk of money too if you want to pay it off before then...........I’m getting over £100 a month in interest on the cash and paying out £200 so it’s only going to cost me £1600 . Just physiologically i want to be mortgage free , not worth £10k to me
Sarnie said:
The Early Repayment Charges will be detailed in Section Ten of your mortgage offer, that you would have agreed to when you took the mortgage out.......
Reading a contract before you sign it.....What kind of crazy world do you live in?I get the impression if you cannot tweet it these days theres too much written content for people to process
.[quote=matjk]I absolutely understand there are early repayment charges , and I have no doubt they are buried somewhere in the 30 pages of paperwork I signed and I’m on the hook for them no matter what. What surprises me is they want 300% of what they would be entitled if the mortgage ran its course. It’s not a big deal , i can wait 16 months but I thought they would just accept all that money plus all the interest . Then they have all the money they would have made in interest (yay) plus 140k to lend out to the next person (yay) .
I’m getting over £100 a month in interest on the cash and paying out £200 so it’s only going to cost me £1600 . Just physiologically i want to be mortgage free , not worth £10k to me [/quote
Just a thought. You’re usually allowed to pay off up to 10% of the out standing amount each year. So pay 10% now, 10% ASAP next year and then residual at the end of the fixed term. Probably save more in the interest on the mortgage than you gain on the same amount saved. Depends on your specific case, mortgage etc, I worked about the numbers on mine and it saved a fair bit. Of course depends on the terms of your mortgage!
I’m getting over £100 a month in interest on the cash and paying out £200 so it’s only going to cost me £1600 . Just physiologically i want to be mortgage free , not worth £10k to me [/quote
Just a thought. You’re usually allowed to pay off up to 10% of the out standing amount each year. So pay 10% now, 10% ASAP next year and then residual at the end of the fixed term. Probably save more in the interest on the mortgage than you gain on the same amount saved. Depends on your specific case, mortgage etc, I worked about the numbers on mine and it saved a fair bit. Of course depends on the terms of your mortgage!
I wanted to end a 5-year fixed last year but the ERC's were too much. It was cheaper to 'port' the mortgage and pay the last 18months of it at 3.99% than pay the ERC and start up a new product.
I thought the mortgage would have to be paid at 3.99% until the term expired at Oct this year but this week I got a letter from Santander offering to set up a new deal if I stay with them, waiving the ERC. The new, cheaper payments would start when they accepted the paperwork from me.
No product fees, set up fees, valuations or credit checks. I'm well happy!
The deals offered were only slightly more than on MSE.com so I have accepted a new 5 year deal from them at 2.14%, 2-yr deal was 1.8% but for £55k it was only a £5 pm difference.
I thought the mortgage would have to be paid at 3.99% until the term expired at Oct this year but this week I got a letter from Santander offering to set up a new deal if I stay with them, waiving the ERC. The new, cheaper payments would start when they accepted the paperwork from me.
No product fees, set up fees, valuations or credit checks. I'm well happy!
The deals offered were only slightly more than on MSE.com so I have accepted a new 5 year deal from them at 2.14%, 2-yr deal was 1.8% but for £55k it was only a £5 pm difference.
Nothing new here. Every single mortgage I’ve had in the past 15 years has had ERC’s. I don’t know what the OP is complaining about. The figures aren’t plucked from thin air they are there in writing when you sign the contract.
Oh and the contracts are very easy to understand these days. I’m no mortgage expert but am very happy with how my last few mortgages have been been written in laymen’s terms for me to understand. The ERC’s are very clear.
Oh and the contracts are very easy to understand these days. I’m no mortgage expert but am very happy with how my last few mortgages have been been written in laymen’s terms for me to understand. The ERC’s are very clear.
I understand where the OP’s coming from, there’s no dispute as to the fact early repayment charges should be/are in place but they can be extremely disproportionate to the amount of interest the mortgage company would receive over the repayment period.
Yes, it’s in black and white and most (all?) lenders will have a similar set up, but that doesn’t make it reasonable. If you wanted to pay off any other type of loan the repayment would at worst case be ‘interest in full’ but mortgages are unexplainably different.
Yes, it’s in black and white and most (all?) lenders will have a similar set up, but that doesn’t make it reasonable. If you wanted to pay off any other type of loan the repayment would at worst case be ‘interest in full’ but mortgages are unexplainably different.
To be honest thinking I would be in a position to pay the mortgage off early when I took the mortgage out 3 years ago was but a pipe dream. The mortgage term was 18 years and over £220k , so the ERC were somewhat irrelevant at the time. I only have 16 months till my fixed term ends and then it’s game on !
I did see that you can fight the ECR and in many cases the banks have folded on them.
Just seems silly when I have the cash in the bank not to pay of the mortgage as being mortgage free is something of a milestone and the sooner the better . Unless I die I guess in which case I’d be better leaving the money in the bank and let Santander pay it off . Won’t help me much mind !!
I did see that you can fight the ECR and in many cases the banks have folded on them.
Just seems silly when I have the cash in the bank not to pay of the mortgage as being mortgage free is something of a milestone and the sooner the better . Unless I die I guess in which case I’d be better leaving the money in the bank and let Santander pay it off . Won’t help me much mind !!
matjk said:
To be honest thinking I would be in a position to pay the mortgage off early when I took the mortgage out 3 years ago was but a pipe dream. The mortgage term was 18 years and over £220k , so the ERC were somewhat irrelevant at the time. I only have 16 months till my fixed term ends and then it’s game on !
Sounds your in a position most people would be very envious of, 16 months is no time at all, just sit back and plan life without a mortgage . I remortgaged to a 10 year fixed
Yes 10 f
king years.
After 5 years I came into some money.
So we overpaid by the max allowed. Until with 3 years left they said, i "if we take this next payment we will have to charge early repayment fees"
So for 3 years my mortgage payments were £12 A month.
Yes 10 f
king years. After 5 years I came into some money.
So we overpaid by the max allowed. Until with 3 years left they said, i "if we take this next payment we will have to charge early repayment fees"
So for 3 years my mortgage payments were £12 A month.
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