Is there a charge for ending your mortgage (that is sell up and pay it off)

J

johnnybegood

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Hi i have a mortgage with Ulster Bank about 15 months now. Looking at trading up as the home was always just a foot on the ladder. Have been given a good offer from IIB and want to go with them for the new mortgage (also UB were not as willing to be as flexible in terms of loan amount - there loss)

My question is this: Will i be charged for exiting the mortgage? I am a ufirst account holder and am on the tracker rate (+1.05%) I need to know this as i need to do my budget and see what my top offer for the house we are aiming for will be.

thanks for any help

Johnny :)
 
Since you are on a tracker variable rate there should be no penalty payable. Usually the penalty is only applied if you are in a fixed rate.
 
I don't think you will be charged as its a variable interest rate with a fixed margin, usually there is a charge if you fix the interest for a set term and want out before the term is up.
Going for the same mortgage, have been approved and waiting for house to be complete before drawing down, did you have many problems with the UB?
 
You may need to check the terms and conditions. Some mortgages have a minimum time period before you can pay it off.
 
Hi thanks for the comments,

Find UB great wish i could stay with them to be honest but like i said there not as flexible as IIB. Have read through the terms and conditions and could not find anything with reference to a get out penalty. Just wanted to get some advice before i ring them so i have a bit of an understanding what to ask and what to look out for.

thanks guys
 
Speaking of IIB, they have a clause - think it's called clause 22,whereby if you leave them of 3 years within taking a variable mortgage out, they will charge you a hefty penalty. This is shown in the terms and conditions - however a friend of mine was badly stung...
 
Under the Consumer Credit Act lenders can not charge a redemption penalty on a variable (or tracker) homeloan. Penalties can be charged on investment mortgages under the terms and conditions.

Sarah

www.rea.ie
 
Sarah W said:
Penalties can be charged on investment mortgages under the terms and conditions.
Click to expand...

and what about fixed mortgages ?
 
Sarah W said:
Under the Consumer Credit Act lenders can not charge a redemption penalty on a variable (or tracker) homeloan. Penalties can be charged on investment mortgages under the terms and conditions.

Sarah

www.rea.ie
Click to expand...

Hi Sarah,

Thats true about banks not being able to charge a breakage cost on variable loans but I arranged a mortgage through youselves at Rea (Very impressed with the service) which involved getting a refund of the commission paid by the bank to Rea (1% of the mortgage). One of the clauses of the contact was this refund was repayable if I changed mortgages within the first three years. This is the type of charge I was talking about and people need to be aware of. As far as I know people who switch mortages and get legal fees paid have the same clause.
 
Sunny

The charge you were talking about was applied by Rea, not by the lender. If you repay you mortgage when you are on a variable rate you should not pay a penalty.

If you are in a fixed rate the penalty varies depending on the lender. They may charge 6 months interest or the interest due to the end of the fixed term.
 
But is that not only because Rea have to pay back the commission to the bank if I pay it off within 3 years that they pass on the charge to me. If not, there is no justification for it
 
Yes its probably is because Rea have to repay the commission. All brokers have to repay the commission they receive if the borrower repays the mortgage within a certain period.
 
Hel_n said:
Yes its probably is because Rea have to repay the commission. All brokers have to repay the commission they receive if the borrower repays the mortgage within a certain period.
Click to expand...

So it is a charge by the lender for paying off your mortgage within a certain time period. I am not saying it is a big deal. Just think people should be aware of these things in case it is applicable to them.
 
But his charge is applied by Rea, not the lender. Few brokers pass this charge onto the customer.
 
Hi Sunny. Yes, REA get paid commission which we refund to the clients. If the mortgage is redeemed (repaid) within 3 years and we suffer a commission clawback then we have go back to the client and request repayment of the amount of our loss. This is very clearly set out in our Terms of Business letter. However there is ALWAYS room for negotiation and there is normally a way for our clients and REA to get a win/win situation. We rely heavily on existing clients coming back to us and referral business and that is why REA is growing so quickly even we are surprised! :)

Sarah

www.rea.ie
 
Don't worry Sarah. Had no problems with the clause (as you say, clearly stated) or the service provided from REA!
 
hey interesting discussion,

means bad news for me though. I got my mortgage through Mason Financial Services in Rathmines just over a year and a bit ago.

Going by this discussion i can expect to get a call in the near future asking for a refund of the commission. Going to go through the terms and conditions but i don't remember seen a clause to that effect.

(1) Do all brokers do this? Is there a fixed period or is it varied according to brokers own wished?

(2) How much is the commission normal? Is it 1% of the mortgage advanced or 1% of total monies due to be paid?
 
Check the terms of business letter you (may) have signed at the time. REA are the only brokers in Ireland to refund commission so I wouldn't expect a clawback to apply if they didn't give you the money in the first place!

Sarah

www.rea.ie
 
Thanks Sarah, I have the t&c's at home and from memory don't remember such a clause and i am normally quite obsessive with studying forms!!

thanks for the quick reply
 
Very few brokers do this, if its not set ot in their terms of business they can't expect you to pay it back.
 
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