Paying off the mortgage early - shock!
 

Something else to consider financially when emigrating and selling up everything in the UK - we've just received our mortgage redemption statement. We are only 3 years into a 25 year repayment mortgage - despite paying out approx. £15000 to the building society our mortgage has only been reduced by £3000, then they add on their admin fee and early redemption penalty, and we end up having paid off just £1500!!!

Re: Paying off the mortgage early - shock!
 

Jacqui <[email protected]> wrote in message
news:<[email protected]>...
    > Something else to consider financially when emigrating and selling up everything in
    > the UK - we've just received our mortgage redemption statement. We are only 3 years
    > into a 25 year repayment mortgage - despite paying out approx. £15000 to the
    > building society our mortgage has only been reduced by £3000, then they add on
    > their admin fee and early redemption penalty, and we end up having paid off just
    > £1500!!!

Okay, but out of the £15000 you paid, was £333 a month the interest on the mortgage?

£3000 over 36 months is £83 per month £12000 over 36 months is £ 333 per month Giving
£416 per month as a mortgage payment. Is that approximately the figure you paid to
the building society each month?

The admin fee should be approx £150. If you imply that you are going to take them to
court to contest the redemption penalty, then I doubt they will insist on it. I got
away with it on my mortgage. Just don't tell them you are emigrating or they may
realise you don't have time to take them to court.

joe

Re: Paying off the mortgage early - shock!
 

But I don't quite follow. We are tied in with ours and signed the bits of paper on which the redemption penalty was stated so how is it possible to get out of it? I need to be enlightened on these subjects with alot of explanation as I am not too hot when it comes to the financial stuff. A bit slow really.

Re: Paying off the mortgage early - shock!
 

The early redemption penalty I can't really complain about, we did read the small print and sign on the dotted line, but of course 3 years ago we didn't know we were emigrating.

What really gets me is just how much we have paid out, and how little this has reduced the mortgage by. You're right Joe the payments were approx. £420 a month. In effect we only borrowed £63000 for 3 years (not 25 years as originally planned) surely the building society should re-calculate the interest payable? Any mortgage boffins/accountants out there?

Re: Paying off the mortgage early - shock!
 

Jacqui wrote:

    >The early redemption penalty I can't really complain about, we did read the small
    >print and sign on the dotted line, but of course 3 years ago we didn't know we were
    >emigrating.
    >
    >What really gets me is just how much we have paid out, and how little this has
    >reduced the mortgage by.

That's how repayment mortgages were explained to me years ago. All your monthly
payments do for a few years is pay off interest. It takes a while before you reach a
stage where the monthly payments start to reduce the amount owed.

I had an "interest only" mortgage where the monthly payments would never reduce the
amount owed. At the end of the 25 years I'd still have owed what I borrowed. I had a
3 year discounted rate with a 5 year early redemption penalty period. It cost me
105.8% to pay it all off after 3 years. At first I thought this was steep, but after
doing the sums on the interest I'd gain from waiting 2 more years I found it was
still cost effective to take the penalty.