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4% Redemption Penalty on mortgage. Can I challenge it?


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My Wife and I took out a 5 year fixed rate mortgage with the Chelsea Building Society last year, and at the time we had no intention of paying off the mortgage early and the early charge was not a factor. Now my Wife and I have decided to buy a plot of land and do a Self Build, unfortunately, Chelsea do not offer a self build mortgage and as a result we will have to leave Chelsea for another Lender.

 

The issue I have is that a 4% penalty is excessive given that the BoE base rate is 0.5% and that Chelsea will borrow funds at a much lower rate than 4%.

 

Can I challenge the rate on the basis it is excessive?

 

Thanks

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My Wife and I took out a 5 year fixed rate mortgage with the Chelsea Building Society last year, and at the time we had no intention of paying off the mortgage early and the early charge was not a factor. Now my Wife and I have decided to buy a plot of land and do a Self Build, unfortunately, Chelsea do not offer a self build mortgage and as a result we will have to leave Chelsea for another Lender.

 

The issue I have is that a 4% penalty is excessive given that the BoE base rate is 0.5% and that Chelsea will borrow funds at a much lower rate than 4%.

 

Can I challenge the rate on the basis it is excessive?

 

Thanks

 

You took a fixed rate mortgage with an early repayment penalty.

 

If you now wish to claim the penalty as excessive given rates are low, are you arguing that had rates sharply increased the mortgage company could have unilaterally increased the early repayment charge?. I don't think that would be "fair".

 

The terms were set out. & binding whichever way interest rates went. Do you have any other grounds to contest it beyond "turns out interest rates stayed low"?

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