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Mortgage ERC

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Author Topic: Mortgage ERC  (Read 1348 times)
Posts: 1

I like property

« on: July 19, 2019, 08:08:18 PM »

Good evening,

I am trying to get out of the buy to let market. Today I telephoned my lender to discuss paying off my mortgage. To my utter disbelief I was told that the early repayment charge would be 6,000. This is approximately 30% of my equity. Unfortunately my circumstances have changed and I can no longer afford capital tied up in a second property. With the recent tax changes I am also left out of pocket in this area of business. After doing some research it is evident that the ECR is air tight and I can do absolutely nothing to get these waived or reduced. Or can I???

Just a thought or does anyone have any input to the following idea? If I informed my lender that I was now residing in the property full time I would of course be in breach of the mortgage term (buy to let not residential). From what I understand these breaches will force the lender to threaten me with a mortgage recall warning, which of course I will be delighted to read. The lender has no policies, terms or conditions in regards to the fees for recalling the mortgage. As no policies exist they will be hard pushed to charge the ERC on the mortgage recall. This action will not be an early repayment, but a breach of contract forcing the lender to recall the mortgage, so theoretically they can not enforce the ERC as it's not early repayment.

When the recall letter arrives I will reply by stating that my circumstances are such that I need to reside in the property, express my disappoint that the issues can't be resolved and write them a cheque for the full balance of the mortgage funds and interest up to that date. Obviously excluding the 6k ERC. The Mortgage gets recalled and the ECR is not paid.

My only concern is how this might effect my credit rating? The account and balance will be paid in full with no defaults so curious if the recall or breach in policy will someone effect my credit rating, despite no default or late payment.

Genius or idiototic?

Global Moderator
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Posts: 4351

Abuse Officer

« Reply #1 on: July 19, 2019, 11:23:11 PM »

Sounds genius... but is it honourable? You signed up to a mortgage with an ERC with your eyes open, just like I have in the past... usually in exchange for an attractive mortgage rate below the SVR. The Lenders have to make their money too... it's not their fault things haven't worked out for you. If your only concern is how it will affect you I suppose my words won't land.
Global Moderator
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Posts: 570

I like poetry

« Reply #2 on: July 20, 2019, 02:46:07 PM »

What you're suggesting amounts to criminal fraud and would screw up your credit rating to the extent that no mortgage provider would ever lend you so much as a cigarette lighter ever again. If you've only got twenty-odd grand of equity in the property anyway, how are you going to pay off the mortgage without selling it?

In any case, I wouldn't mind betting that charges at least equivalent to the ERC would apply in this case. You won't be the first person to have thought of this cunning plan!
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