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i have a paying off lump sum on mortgage/penalty - type question

(12 Posts)
Tortington Fri 23-Jan-09 08:41:13

we have the chance to reduce the mortgage ( which is fixed rate at 5.7...something down to 13 years. we only had had this mortgage since july 08

can we change it for a more favouable interest rate and avoid paying the 4-5k penalty?

thanks

Tortington Fri 23-Jan-09 08:48:03

5.87 it is atually.

LIZS Fri 23-Jan-09 08:49:34

You need to check t and c's . Some policies have strict limits on how much/often you can pay in lump sums without penalty, others don't. I suspect you'd have to buy yourselves out of the current fixed deal but may still be worth doing so if you can negotiate a better deal on the basis of the loan to value % having gone down significantly by paying off capital(but obviously the value may well have slipped too) and benefit in the longer term. You can but ask.

Tortington Fri 23-Jan-09 09:32:30

ty liz, cam you explain more simplyplease?

LittleMissNorty Fri 23-Jan-09 09:36:33

You may be able to negotiate if you stay with the same lender.....my mortgage only allows me to pay 10% off though without penalty....and as its the same mortgage, interest rate is the same.

You can only ask them....

Tortington Fri 23-Jan-09 09:41:09

ty

noddyholder Fri 23-Jan-09 09:41:17

Hello Custy!Get all the paperwork out and look at redemption penalty section.Sometimes you are only penalised if you pay the lot off.Is it a flexible mortgage because if it is there are no fees for this but if you got any special concessions eg discounted rate or fees paid then usually they make you pay for those.If you stay with the same lender they will look more favourably but if they are going to charge you you may aswell see a broker and get the best deal you can.hth

CeceliaAhern Fri 23-Jan-09 09:44:09

I think what you are asking is if you can basically get out of that mortgage and into a better product?(whether it be with the same lkender or not). We have done this once before but it was when we were moving home so we had a bit of equity released to manage to pay off the penalty and change to a better rate with another lender. You could ask your present lender if they would reduce the penalty somewhat if you stayed with them and even bluff about going elsewhere. Sadly, I don't think you will get off scot-free. I feel your pain, our mortgage is an even higher rate and we are tied in til 2012. I don't see us trying to get out.

ilovemydogandMrObama Fri 23-Jan-09 09:53:28

Capital repayment was the term used when we paid off a chunk last year.

There weren't any penalties, but there would have been if we paid it all off, so as long as you leave £1.00 or something on the mortgage, it isn't deemed as paid off.

But check with your lender. Ask how much you can repay without penalties. Also, ask how much the penalties are, as it may be worth it in the long run to absorb them..

Or negotiate smile

Tortington Fri 23-Jan-09 12:35:53

right they have said that it would cost us 5k o buy out of the mortgage but then we can get a tracker - we wouldnt have to pay penalty early repayment fees of 4k when we pay off the lump sum

as we will then own more than 60% they can do is a tracker at 3.99 which would literally half our payments

so we decided to keep to payments and half the term + lump sum ofcourse

means we can get our mortgage down to 10 years

it was well worth the phone call - thanks girls

ilovemydogandMrObama Fri 23-Jan-09 13:34:58

Tracker is a very good idea -- wonder what they will do when interest rate goes to 0% hmm

LIZS Fri 23-Jan-09 18:49:16

glad you sorted it out

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