IRD or Interest Rate Deferential is a formula the banks use to calculate mortgage penalty if you decide to break the mortgage with your current lender. The IRD formula is used in a case where the current posted rates are lower then your mortgage rate. This is done in order to have a bigger penalty if you are breaking your mortgage for a better rate.

There is no way out when it comes to paying the penalty for breaking the mortgage. The bank where you are transferring the mortgage may agree to assume the penalty. If you are not selling your home but want to get a new mortgage make sure that its worth it to you. If you have to pay a mortgage penalty it might not be worth it for you to switch. Most banks offer cancellation penalty calculator. RBC offers a pretty good one but you will need to know the following data; Original mortgage amount, interest rate, months left in the term contract. Once you enter these fields you will get an amount you need to pay to cancel the property. Its also displays two options one is for 3 month mortgage interest and the other one is IRD fee . You need to know what is the term used to define your penalty type. Most banks charge 3 month mortgage interest which could be about 1000$ per every 100,000 mortgage.

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Hi everybody, what are the penalties if i pay my uk residential mortgage early? for instance, if i was able to pay out my entire mortgage in say 6 years, instead of 25 years? what kind of penalties would apply in that scenario?

My expertise is Washington State in the USA but I think the answer would, more than likely, be the same in the UK. The mortgage agreement must specify any prepayment penalties that are included. Well qualified buyers that I have helped buy homes over the last few years have never had any prepayment penalties. When there are penalties (less qualified borrowers) they often only apply for a few years. You can check your mortgage agreement. Better yet, call the company that holds the mortgage. They can probably answer that question in a heart beat.

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I have been with boi for 7 years and refinanced to a 5 year fixed that took effect july 01, with the paper signed a week earlier. now (july 10) i suddenly find i may have to move and pay back the mortgage in the next 30 days. how do i get out of the onnerous 5% penalty after a couple of weeks (only). is there a cooling off period. i called them and they said absolutely no.

If they said no it's likely that that is the case. It may be worth speaking to them in person and seeing if you could transfer the mortgage to another property

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I`m remortgaging and need about £59000. don`t wanna be tied in too long. about 2 years maybe or longer with no penalty. ta!

well we are on an interest only mortgage for 3yrs with mortgage express- excellent rates our mortgage is 135,000 over 25yrs and repayments 700 per month (even with all the interest rises recently) definately a good option as it eases of the pressure of having to repay initially too. it has meant we are able to worry less about the mortgage and get us settled in with all the other bills. ours is 3yr with a 10,000 penalty if we move/ swap mortgage before then. its not too bad but if we weren't tied in we would have porbably moved by now!

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I have a mortgage of 100k at an ltv of 50%. the fixed rate is high with large exit penalties. i am allowed to overpay up to 25% (=25k). currently there are much cheaper rates available. would a uk bank allow me to take out a second mortgage of 25k to repay the first mortgage. this would mean that i would have two mortgages, one for 75k at the original rate, and the other for 25k at the new lower rate. allowing for fees, this approach should save me money. does anyone know if this is allowed or possible in the uk?

Bearing in mind the (bad) state of mortgage lenders at present you need to ask this question to each mortgage company and perhaps a mortgage broker. Lenders at the moment are only interested in cherry picking lowest risk borrowers. Yours is a special case so cannot be generalised!

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I want to buy a house worth about £100,000 but i will have about £25,000 a year spare that i want to plough back into my mortgage to get it paid off really quickly to avoid paying too much intrest. i looked at www.oneaccount.com which seems the best as no penalties for early re-payments (in fact they encourage it!) but i want options. i think virgin does a similar deal where you can pay off your mortgage really fast with no penalties. any one done anything like this with a 'one account' like this and can advise me who to got to? in response to 'take two'.....i dont have a mortgage lender thats what the whole question is about!

This may sound tedious but your best bet is to actually make an appointment with various mortgage lenders and sit down and talk with them. Every situation is different and these days banks are capable of tailoring a mortgage to your requirements. Best of Luck

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I live in the flat me and ex have mortgage on. it is in both names. she has moved out and pays half the mortgage only.mortgage comes out of her bank account and i manualy pay in my half to her bank. she has now said she is not happy paying half and wants more money from me or me to pay all of it. can she demand this or does she have 50% responsibility in the eyes of the law.we can not sell until may as penalties are way to high. to rent it out we would need to get a different mortgage i think so that not going to work. any advice and links to advice websites needed many thanks in advance more info, were are not married. mortgage is fixed rate till april and we owe 100% of mortgage as we had it on interest only

If it is in joint names you are both individually and jointly liable..........so if you don't pay the bank will chase her and visa versa.....however as it is normally named as Mr & Mrs the bank will go after the first named....Mr and if it is not paid the bank will go to court and get the property sold and you will have to pay all bank and court costs, money owned, interest...and may be left with very little.

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My friend has an interest only mortgage with four years left on it but has been told by the bank that there will be a shortfall of between 3 and 7k at then end of it. question is, she wants to sell it within the next 12 months so is it possible? i'm guessing that the proceeds from the sale of the house will clear up any repayments due with the bank but are there penalties involved and if so, roughly what are they price wise? they just want a quick easy, hassle free sale (if that's possible these days lol) thanks in advance for any help :)

Not possible to answer the question without knowing the terms of the mortgage. You need to talk to the mortgage lender or check the policy yourself.

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The mortgage is insured for payment of 125% so that the mortgage and the protection is paid yet the bank would only give me the money directly and ask me to make payments toward them. at one point they did try and say that they would pay one portion directly but not both. as this is all done through the halifax on a halifax mortgage- i need to know why they do this and whether it's legal because i've just been told that by doing this allows them to access help from the taxpayer in making these insurance payments (feels like a scam to the detriment of the taxpayer)? the dwp say the taxpayer now has to foot around 40% of the mortgage bill for this period (i may have the figures slightly wrong) and it sounds and feels like my policy has been sold at the detriment of the taxpayer- maybe a loophole that allows them to commit fraud without penalty? all i know is that i'm not absolutely thick and this stinks of labour policy- where has that got us under brown?

If it wasn't for Mr Brown and Labour, this bank would have gone out of business. Fine for net borrowers, whose mortgages would be bought by another lender, and would notice no difference. Not fine for net depositors who would have lost their savings in excess of the government deposit guarantee. Be grateful to Gordon.

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My son is on a fixed rate mortgage deal, four years to run and currently running at 5%+ per month. they are expecting their first child this year and therefore need to cut their costs as much as possible. the mortgage will be a major consideration and no one could have foreseen rates dive to their all time low. the mortgage is with hsbc. does anyone know if the bank, bearing in mind the current economic climate and financial pressures people face, would be prepared to change this mortgage tor a variable rate, and hence enjoy the new rates, while not insisting on a heavy redemption penalty or at least negotiate that to ensure that he can keep his house in this tough climate. does anyone consider that hsbc may put people and property before money on this occasion? is the word 'help' too much to ask in the current climate? all views welcome ... thanks

hi, i would say no they wouldn't as banks are set to lose quite a lot of money in the near future so will be relying on people such as your son who are on the high fixed rates to compensate.As you probably already know they make most of their profit from interest from the money they lend to their customer, however because of the current climate they will be lending less therefore getting less in return. That all said if you don't ask you don't get - it can't hurt to ask them??