to challenge the bank on £18k mortgage redemption fee?

[lindylayton]

I know mortgage redemption fees are part of the contract we signed and usually not waived. In this scenario I wonder if I have a small chance of getting anything back because -

a) we signed a 2 year deal, and are redeeming only 6 weeks before the 2 year deal is up.

b) we are forced to redeem 6 weeks before 2 year deal is up because the buyer of our house needs to avoid the new stamp duty increase coming in on 1st April. Our exit date for the mortgage is 31st March !!!

Please share your thoughts and advice, thank you!

That's crazy, I mean 18 K is a hell of a lot to pay to allow them get a lower stamp duty rate I wonder what does the six weeks payment add up too as its a very high figure.

Id try and talk to someone higher up the chain at the bank and see if they will see sense. To answer your question. Yes, I have managed to talk sense into a bank i was dealing with it takes finding someone who can make those decisions.

When I worked for HSBC we always waived the redemption fee if a new mortgage was being taken on new property immediately and just ported the old terms and rates over to new mortgage. You could ask for this?

An extra £36k at 3% means your home is being sold for £1,200,000.

Third world problem I would say!! Sort it out between you.

To avoid fees for them you're incurring fees, so you pass on those fees. It's half than what they expected so shouldn't be too much of a problem right? Or split the difference.

Rules are rules for a reason. You start breaking them for one you need to break them for all.

Sorry this is crazy. You are prepared to give up £18k so someone else can save £36k? Either they take the hit and pay your entire redemption fee (still saving themselves £18k) or walk away.
Don't be bullied by a pushy Buyer, agent or lawyer. It's not their money! If the house has sold once it will sell again.

Speak to your solicitor. If you complete on 31st March at say 4pm in the afternoon your solicitor probably won't send the money to the bank until 1st April and you will avoid the fee.

I had a success challenging this quite a few years ago. Had a 5 year tie in and exited at 4 years 10 months. Had a real cheap deal with another lender so didn't take the existing mortgage on to the new house.

It took 3 letters though as they rejected the first two times.

I used the fact that I'd increased the borrowing in that time so had paid more than the I would have in the 5 years if I hadn't have borrowed and just kept on complaining.

The bank agreed to apportion it so I paid something like £300 instead of £3000.

I thought that you can take your mortgage with you to the next house, why cant you do that?

Speaking to them nicely might get you further than challenging them. It's worth a try asking but I don't see what your grounds are to challenge...

CakeandChocolate I'm afraid that's very bad and incorrect advice. There is a legal obligation to redeem the mortgage on the day of completion. The usual latest time for completion is 2pm, designed partly so bank deadlines for same day payments can be met. Failing to redeem a mortgage on completion day is a breach of contract and no solicitor would agree to it.

Do you need to pay the money into the mortgage straight away? Can it wait somewhere for a week or so before you pay it into the mortgage?

Agree, on the advice point. Completion is the date of redemption of your mortgage and is also the tax point for SDLT.

As the purchaser is buying a £1.2m property as a second home, yet it is giving you a headache I suggest they are being greedy and you are being weak?

You do not need any help on this expect professional help for which you will pay well. Go and get it.

Whether you exit with less than 24hours left or 6 weeks left, your bank should accept a payment proportional to the time left.
Ie £18k for two year tie in. That's 730 days at £24.65 per day effectively.

If you wish to exit 6 weeks before, then get your solicitor to offer £1000.

If you exit less than 24 hours to go then make an offer of £100 but state the tie in works out at £24.65 per day.

Most tie ins works on a ratchet so the amount decreases as time passes. It's usually a monthly decrease.

You can only ask and keep asking and stating your case.

Whether you exit with less than 24hours left or 6 weeks left, your bank should accept a payment proportional to the time left. No, depends on the contract. Yes, they can only ask, but to be honest I would put the problem back to the potential purchaser. They have the most room to manoeuvre.

As the property you are selling is mortgaged, you'll need the agreement of the mortgage lenders to release the charge they have over the property so I think your chances of not replaying the mortgage until after the deadline are nil, unfortunately.

Is it a flat rate, 3 times the monthly payment or interest? I'm not sure how you can twist their arm, tbh but it's worth asking.

And also please don't put it on your solicitor to negotiate your redemption charge unless you are happy to pay their additional costs for doing so.

Early redemption penalties sit on very shaky legal ground - technically, they act as "fetter on the equity of redemption" and are unlawful.

Have you asked your solicitor about this?

A solicitor's fee is well worth paying if it saves you £18k!

Do you need to pay off your mortgage to move? I'm wondering if a 24 hour bridging loan would be the answer.
Then you could do the mortgage redemption on 1st April

Bridging finance is cripplingly expensive in terms of its arrangement fees (well it was last time I looked)

£18k cripplingly expensive?

Options are bridging loan, common in this situation and should work out cheaper especially a fixed term one.
Or make a complaint to the lender, they may only charge the 6weeks of interests which would be fair , do threaten that you will take it to the financial ombudsman. With all the Fca regulation they will ensure you treated fairly as it is a guideline of the FCA.

If you can get the charge dropped altogether, there would be no need to pay anything at all.

The only reason mortgagees get away with having early repayment charges at all is that so few mortgagors ever challenge them.

If you take them on, you have a good chance of winning.