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Mortgage Interest Rates

Discussion in 'Home and Garden' started by Psycho Sonny, 11 Mar 2020.

  1. rdb2012

    Wise Guy

    Joined: 18 Aug 2012

    Posts: 1,379

    I’m selling(have an offer) on my flat that I bought in 2018. I have 5 months left until my fixed rate is over and I just found out that I have to pay early repayment fees of 8k. Is there anyway I could reduce this.

    Spoke to the bank and they said I have to wait until July.
     
  2. ivrytwr3

    Mobster

    Joined: 25 Aug 2006

    Posts: 4,410

    Did you not look into this before you decided to sell?! Options as you've already spoke to the bank:

    Port the mortgage.

    Delay the sale.

    Suck up the fee.
     
  3. rdb2012

    Wise Guy

    Joined: 18 Aug 2012

    Posts: 1,379

    I didn’t unfortunately. I’m new to this and while I thought there will be a penalty I didn’t think it’ll be that much. Now I have checked my contract and it specifically mentions 3% interest for early repayment.
     
  4. TheOracle

    Capodecina

    Joined: 30 Sep 2005

    Posts: 13,431

    Depends if you are selling your flat in order to move into a new property? If so, you can port your mortgage across.

    If you are simply selling and wanting to clear the debt, then unfortunately you are going to have to pay the ERC.

    Can you tell us a bit more about your situation?
     
  5. rdb2012

    Wise Guy

    Joined: 18 Aug 2012

    Posts: 1,379

    I bought the flat with the intention of refurbishing it and living it. I rented it for just over a year then I got quotes to do the work but unfortunately its much more than what I anticipated. Simply not worth spending this much on it. So I decided to sell it and I am looking to buy a new place(possibly a house ) when I find. CUrrently living with parents.
     
  6. ivrytwr3

    Mobster

    Joined: 25 Aug 2006

    Posts: 4,410

    If you only have an offer that means no fees have been paid, by the buyer.

    For the sake of 5 months and 8k,is it worth either refusing the offer or withdrawing from selling?

    Depends if you can afford it or think prices are going up or down.
     
  7. Psycho Sonny

    Caporegime

    Joined: 21 Jun 2006

    Posts: 36,461

    It's not free to sell a home.

    He's had to list it. Pay fees and possibly lawyers.

    Is it worth pulling out now and have wasted everyone's time and money?

    It won't be £8k when you take into account all of the above.
     
  8. potatolord

    Hitman

    Joined: 21 Jan 2010

    Posts: 809

    Ugh. Annoying.

    Might be worth speaking with your buyer and seeing if you can delay the sale a bit?

    Other options are just paying the 8k or cancelling the sale. Neither of those are great, but those are the only other choices.
     
  9. rdb2012

    Wise Guy

    Joined: 18 Aug 2012

    Posts: 1,379

    I don’t think they would as they’re desperate to complete by March to take advantage of the stamp duty holiday. I have to consider the expenses of leaving the flat until July if it sells straightaway. Interest costs me 400 per month so that’s 2k for 5 months. Also there is the council tax not much but I guess it adds up.
     
  10. Buffman

    Sgarrista

    Joined: 4 May 2007

    Posts: 8,007

    Location: West Midlands

    Have you spoke to your current lender and asked how long until you buy a new property would you incur the early repayment charge?

    Some let you sell, wait 6 months then buy a new property. Worth a double check. Obviously if you need to complete within 6 months or face an 8k bill I'd advise looking as soon as your current property completes.

    Also worth considering if you satisfying the lending criteria on your new property.

    Are you sure the interest is 400 month or is that the full repayment cost/month? I know it can be high (mine will be around 600/month initially in interest)
     
  11. Slade2

    Wise Guy

    Joined: 14 Apr 2011

    Posts: 1,112

    Location: Stafford

    Go back to the buyer and give them a sob story about the repayment charge and see if they would be willing to pay half of it? Are you going to make much money on the flat? Are you going to lose any money? Could you cancel the sale and rent it out?
     
  12. ivrytwr3

    Mobster

    Joined: 25 Aug 2006

    Posts: 4,410

    As usual you haven't read the post and made your reply about what you THINK you read.

    I said no fees have been paid by the buyer, NOT by the seller. Therefore the seller will have paid fees.

    I would feel bad if I pulled out and the buyer had paid for surveys etc, but the sale does not seem to have reached that point.

    So up to the seller if they want to lose the estate agent fees to save the £8k fee.
     
  13. Psycho Sonny

    Caporegime

    Joined: 21 Jun 2006

    Posts: 36,461

    You haven't read my post.

    He's not going to be saving £8k at all.lts going to be far less.

    He's paid fees to list it and spent money and time doing so. Those fees will need to be paid again when he relists in 6 months time.

    If he doesn't sell he then has to pay for the mortgage and it's interest until it does sell in future.

    Let's say the market crashes in 3 months and now his flat is worth £10k less. It's likely that could happen with Covid and job losses and the economy tanking.

    He then has to re list and spend time and money selling all whilst paying the mortgage on a flat that's now much harder to sell with what could happen several months down the line. Furlough won't last forever.

    He then ends up losing £10k in equity, £3k in fees and then another £5k in interest as he kept waiting for a better offer.

    He should look at it as getting rid of a property he doesn't want rather than losing £8k as £8k isn't the full cost of backing out.
     
  14. ivrytwr3

    Mobster

    Joined: 25 Aug 2006

    Posts: 4,410

    So basically, you agree that the buyer hasn't incurred any costs - got ya.

    The rest of your post is pure speculation.
     
  15. Tee Hee Johnson

    Mobster

    Joined: 30 May 2007

    Posts: 4,448

    Location: Glasgow, Scotland

    If your new mortgage is with the same company, the sometimes allw you to port the old mortgage into the new (additional borrowing) one.
     
  16. Derek W

    Capodecina

    Joined: 1 Oct 2008

    Posts: 11,587

    Location: Glebe Park

    Posted this in gd but may as well post in here. Just remortgaged last night after putting a lump sum into it earlier this month. Reduced my mortgage by 2yrs 3 months down to 6yrs left. Fixed for another 2yrs at 1.49%. still got room for overpaying as well to get it paid off quicker as well. Aiming for a maximum of 4yrs before I'm mortgage free though.
     
  17. Karl

    Mobster

    Joined: 23 Oct 2002

    Posts: 3,393

    Location: No

    I'm fixed for 5yrs at 1.34% on TSB. By the time the 5yr fix comes to an end, we'll owe around the £95k mark. Our LTV will be below 50% by that point, so whatever happens in the economy, we'll hopefully have something affordable.
     
  18. Psycho Sonny

    Caporegime

    Joined: 21 Jun 2006

    Posts: 36,461

    Chancellor just announced huge growth this year and exponential growth next year but then falling back to normal.

    So I can remortgage on the first of April. Do I go 2 year fix or 5 years?

    Will rates be going down to help this growth? That's the only way I can see massive spending happening is if borrowing is made to become even lower.

    Negative interest rates? Should I go with a tracker then?
     
  19. Peerzy

    Soldato

    Joined: 9 Nov 2008

    Posts: 6,883

    Tracker, I've gone for one every time since my first ever mortgage (which was a 2yr fix) and have yet to lose out. Currently paying 0.79% :D
     
  20. Psycho Sonny

    Caporegime

    Joined: 21 Jun 2006

    Posts: 36,461

    Problem is currently trackers are more expensive than fixed and would have to be considerable movement downwards to benefit.