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Mortgage Tie-In Periods will usually apply when a special or preferential mortgage product is arranged, for example, a fixed, discount or cashback product. With these mortgages, as the lender requires you to stay with them for a minimum period, there will be a mortgage condition which will tie you in to the arrangement for this period. This period is known as a tie-in period, or lock-in period.
Here we take a more thorough look at the Mortgage Tie In Period, and why and how Mortgage Lenders apply Tie In Periods and the potential charges you may face should you pay your mortgage prior to the tie-in period expiring. We also look at extended tie-in periods and explore how we can help with a suitable mortgage even in the trickiest of circumstances!
Table of Contents:
So, as we discussed during the opening paragraphs, a tie-in period on a mortgage will usually apply when a special or a preferential mortgage product is arranged, such as fixed, discount or cash back mortgage product.
As the Mortgage Lender will require you to stay with them for a minimum period of time with these mortgages, there will be a condition to the mortgage which will tie you in to the arrangement for this period. This period is known as the tie-in period on a mortgage, and may also be referred to as a lock-in period.
If you repay your mortgage before the end of the tie-in period, you are likely to incur a penalty known as an Early Repayment Charge (ERC). This is normally expressed as a percentage of the mortgage advance, or a lump sum.
For example, a five year fixed mortgage at 6% may have the following condition relating to Early Repayment Charges:
| Year 1: | 5% of the mortgage balance |
|---|---|
| Year 2: | 4% of the mortgage balance |
| Year 3: | 3% of the mortgage balance |
| Year 4: | 2% of the mortgage balance |
| Year 5: | 1% of the mortgage balance |
Sometimes, the mortgage product may be so attractive that the lender will impose penalties even after the preferential period has expired. This type of condition is known as an "extended tie-in period", or an "extended lock-in period" on a mortgage.
For example, a five year fixed mortgage of 3.5% may have the following condition relating to Early Repayment Charges:
| Year 1: | 7% of the mortgage balance |
|---|---|
| Year 2: | 6% of the mortgage balance |
| Year 3: | 5% of the mortgage balance |
| Year 4: | 4% of the mortgage balance |
| Year 5: | 4% of the mortgage balance |
| Year 6: | 3% of the mortgage balance |
| Year 7: | 3% of the mortgage balance |
| Year 8: | 2% of the mortgage balance |
The implications of extended tie-in periods must be carefully considered. They can be detrimental for those borrowers requiring a greater degree of flexibility and the chance to remortgage regularly or make overpayments. Conversely, for those on fixed incomes who require greater stability, and who have little intention of moving property, then a product with an extended tie-in period may be quite beneficial.
Naturally, all cases are unique, and that's where a Shire Direct specialist mortgage advisor can help you with professional advice and recommendation.
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As specialist mortgage brokers, we have a terrific range of mortgage schemes to help even in the trickiest of circumstances! So, please don't hesitate to Contact Us if you think we may be able to help.
Shire Direct is authorised and regulated by the Financial Services Authority, and we will provide you with advice and a recommendation on a mortgage product drawn from our extensive portfolio of lenders and plans contained within our lender panels that are designed to cover your requirements, needs, circumstances, and aspirations - whatever your circumstances!
Although the mortgage marketplace of today is extremely complex, and finding the right product can be quite a daunting prospect, that's where Shire Direct can really help. Our lender panels are geared to provide a comprehensive selection of mortgage products to enable us to be able to provide the most appropriate scheme for you. We are confident that you will find our approach to be slick and pragmatic. We'll provide you with a rapid in-principle decision, and we work closely with the lender, solicitor and property valuer to ensure we achieve a suitable offer of mortgage for you as quickly as possible.
Our lender panels provide us with an extensive range of plans to accommodate most circumstances including:
Arranging a mortgage, and arranging the right mortgage is crucial, afterall a mortgage is usually the largest financial transaction that you'll ever likely be entering into! So getting it right from the outset is extremely important. Here at Shire Direct advice and service always come first. The first thing we do is get to understand your circumstances, needs, requirements and aspirations which help us to make our recommendation.
Why not call one of our professionally qualified Mortgage Advisors on Freephone 08000 282 281. They're available seven days a week up until 10.00pm, and the call is free!. Alternatively, you may prefer to enquire online at any time, it's both quick and easy to do.
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Well, that wraps up our look at Mortgage Tie-In Periods, we hope you found the information here to be useful. Don't forget there is much more mortgage related information to be found throughout our website, so why not take a little time out to explore some of the options that may be available to you, and remember, we're only ever a free telephone call or a couple of mouse clicks away and would love to hear from you!
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THINK CAREFULLY BEFORE
SECURING OTHER DEBTS AGAINST YOUR HOME.
YOUR HOME MAY BE REPOSSESSED
IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR ANY OTHER DEBT SECURED ON IT.
Adding existing debt to your mortgage will increase the repayment term and overall cost.
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