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Penalty for selling during fixed mortgage term??

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  • 20-03-2007 6:03pm
    #1
    fightingfit
    Closed Accounts Posts: 16 ✭


    Currently thinking of purchasing a second hand house and going for a two year fixed rate mortgage, the question I have is, If i sell before the two years are up will I be penalised? I heard that you are only penalised if the interest rates start to deline, so if rates continue to rise/stay same, I can sell without penalty..

    Hope someone can clear this up for me.
    Cheers


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    #2
    Idleater
    Registered Users Posts: 6,236 ✭✭✭Idleater


    It is entirely up to the bank as to how much they charge you for breaking a fixed term agreement (this holds for any sort of loan, not just mortgages).

    what I would imagine they would do to calculate the fee is calculate the interest that you would have paid, had you paid for the full term. Obviously this would only be the interest part and ignoring the actual principal part.

    Think very carefully about reorganising a fixed term loan, and ask your bank manager about it, because they might be perfectly amenable to a compromised settlement for all I know.

    L.


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    #3
    fightingfit
    Closed Accounts Posts: 16 ✭fightingfit


    thanks for reply..
    anyone else got any info?


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    #4
    Del2005
    Registered Users Posts: 18,987 ✭✭✭✭Del2005


    They have a part of the mortgage which tells you exactly how much it'll cost. Can't remember off the top of my head but its a worked out by the amount of the fixed rate left to pay.
    Basicaly they don't loose much money when you close a fixed rate mortgage but you will.


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    #5
    loodles
    Registered Users Posts: 53 ✭✭loodles


    I wouldnt worry too much, if you were moving on to another property and took out a mortgage with the same lender again they will waive the fees.


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    #6
    dools
    Closed Accounts Posts: 189 ✭✭dools


    We broke a 3 year fixed rate as we sold after 18 months and had to pay approx €4k penalties. We then took a new mortgage with the same lender a couple of months later (new property was not built for a while). We asked them to wive the penalty as we would be using them for our new much bigger mortgage but they refused to budge.

    We went with them initially for the new mortgage as we have it agreed and in place, but went variable and change mortgage lenders after a couple of months because of this.

    I don't think any of them would waive the penalty - that;s the t&c's you sign up to with fixed rate mortgages

    Dools


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    #7
    antoinolachtnai
    Registered Users Posts: 9,787 ✭✭✭antoinolachtnai


    If you break the mortgage (but continue the loan) you might get them to waive the fee. If you break the loan (as dools did) you can forget about it.


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