Britons urged to 'read the small print' as freelancer recalls facing £8,000 mortgage fee

Woman describes how she lost £60k to mortgage fraud

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Rosanna, 42, lives in London and works in the communications sector. In the August before the pandemic, she broke up with her then-partner who she had bought a flat with five years prior.

Due to having two years left on their rate, the pair were expected to pay £8,000 in Early Repayment Charges (ERC).

An ERC is a penalty providers may charge if someone overpays on their mortgage by more than they allow or if they pay the whole loan much earlier than expected.

In order to avoid paying this staggering fee, Rosanna and her ex were forced to make alternative living arrangements while they waited for the two-year period to end.

For Rosanna, the year-long process of deciding how to deal with the fees was a difficult one, which was exacerbated by the trials and tribulations of the pandemic.

Prior to the Covid crisis, Rosanna was in salaried employment, however this changed and affected her ability to buy out the mortgage application from her ex.

“I was in a job with an agency. At the time, I was going through the mortgage application, so I was on the books with a full-time job. Two weeks before the mortgage agreement was about to come in, they put me on furlough,” she explained.

“I asked if we could hold off but it didn’t end up happening, so that was very unpleasant. Then they made me redundant in June or July.

“I’ve spent the year getting contracts working here and there, trying not to drop the ball, just to continue to have contracts and money coming in.”

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House

Mortgage: Freelancer faces two-year wait to avoid £8,000 charge (Image: GETTY)

During the height of the pandemic, being self-employed proved to be difficult for Rosanna to navigate when dealing with mortgage applications. As a freelancer, those looking to meet payments and negotiate contracts are at the mercy of their next gig.

Rosanna said: “The reason it’s complicated is because I’ve only just got three years of accounts and they’re not that high. I’ve got a mixture of accounts, and then I’m on the books.

“There is a pressure [as a freelancer] of having to go and sell your soul to get into a role or job.”

Recently, Rosanna has opted to take on part-time contracts in order to improve her chances of negotiating with her mortgage provider. However, despite this safety net, the process is still far from uncomplicated.

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“To be honest, I’ve now got two part time jobs. They’ve just come about like in the past couple of weeks,” she said.

“I’m on the books now because it’s just easier for me. What the mortgage provider is now doing is that they’re not only taking into account my three years of accounts, but also my contracts.

“But, I don’t know what’s happening. I’m actually waiting on a mortgage offer at the moment.”

At this moment in time Rosanna’s ECR charges are at around £5,000, which she is deciding to pay off to end her predicament as soon as possible.

Mortgage application

Mortgage: Self-employed face difficulties when applying for mortgages (Image: GETTY)

She is currently living in the flat, having previously rented a one bedroom property earlier during the pandemic, while her ex lives elsewhere.

Rosanna explained: “I think we’re just going to take the fee. It’s a lot of money, but after a while you just want to have a clean slate.

“I don’t want to be living with someone all the time. I want to have my own place again. So whether I get this place and rent out I don’t know, but the option will be mine.”

While the experience has been difficult for her, Rosanna has been able to weather it due to her good relationship with her former partner.

“I don’t use the word trapped because me and my partner have a very good relationship, so I don’t want to be negative.

“But, it’s about feeling that you can’t see the wood for the trees and you’re actually not making that clean break.”

In research carried out by Habito, more than three quarters (78 percent) of freelancers admitted that being self-employed makes them worry about their financial situation.

Some 24 percent of the self-employed people polled said they have struggled to apply for a mortgage.

Having gone through these difficulties as a freelancer during the pandemic, Rosanna is aware of the general lack of support for people in this situation – and remains unsure herself about the best course of action.

“I don’t know because I would have liked someone to have given me that advice.

“You never think when you go into a relationship that this is going to happen or when you get a good five-year mortgage deal that you’re going to separate. I’d recommend you to read the small print, be aware and don’t rush into anything.”

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