Mortgage Penalty

newbie2009

Registered User
Messages
74
Hi there

I originally purchased my house with a partner. Since then my personal circumstances have changed and approx 2 years ago I bought my partner out of the house.

At the time my partner insisted on getting the current market value for the property, so I had to reapply for a mortgage on my own.

I received one mortgage offer from the Ulster Bank with a 5 year fixed rate of 5.1%. I have recently approached the bank about maybe breaking the five year fixed rate etc and giving me a better rate, but they insisted that they must charge the penalty of approx 6,500.

I have spoken to a few people who have told me to shop around for a new mortgage, and that banks are keen for business so they might throw in the penalty fee into the mortgage amount, or that there may be some other way around it?

Has anyone any experience of this? or any advice?

Thank you

Newbie!
 
I haven't heard of any banks paying the breakage fee when you switch to them. The most they do is pay your legal fees and even that varies from bank to bank.

6,500 is quite a low amount for a breakage fee compared to some of the figures floating around here. What you should do now is work out what the best rate you can get at the moment is and figure out will the lower repayments save you money over the rest of the term of the fixed rate compared to the breakage fee.

However if you got a mortgage in 2007 on 2007 values, then there's a good chance you might be in negative equity in which case you wouldn't be able to switch banks.
 
Would that not only be an option if s/he has sufficient equity in the house at current values?