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please explain something to me...

em_9187
em_9187 Posts: 79 Forumite
in House buying, renting & selling
right my partner and I are taking out a mortgage:


deposit: 22,500
house price: 150,000
LTV: 85%


we are taking a 3yr fixed deal with nationwide. now I understand there is an ERC during that period BUT what I don't get is...


is there an early payment charge AFTER the three years? Because ideally we would like to get our LTV down to 80% after the three years and hopefully get a better interest rate.


I just don't get the whole thing... so confusing.

Comments

  • H4ppy83
    H4ppy83 Posts: 23 Forumite
    There should not be an early repayment charge after the fixed rate. You normally go on to a variable rate after the fixed rate is up, and you are then able to change lender etc and add more 'deposit' to bring you LTV rate down
  • principlecounts
    principlecounts Posts: 300 Forumite
    First Post First Anniversary Combo Breaker
    edited 22 August 2014 at 8:12PM
    "I just don't get the whole thing... so confusing." - keep asking, I wish they teach these things in school. It's a conspiracy.

    Just to say, H4ppy83 is right, I purchased my house over 3 years ago, 6 months before the 2 years period is up, we just transferred to another fixed interest rate without any ERC (6 months before because Santander allow that). At the moment I'm in process of moving house, but the issue is if I move to a new mortgage provider I will have to pay the ERC because the introductory period ends in May 2015. Our mortgage advisor has suggested to do a top up, as the ERC is too high, and then relook at the situation in May 2015.

    I hope that makes sense!
    Student loan: Cleared.
  • princeofpounds
    princeofpounds Posts: 10,396 Forumite
    First Post Name Dropper First Anniversary Combo Breaker
    No, there is not likely to be an ERC after the fixed period ends. You will move onto the lender's standard variable rate - often not that competitive - but should have high flexibility to remortgage, which you normally do fairly quickly if not right away.

    You then approach a new lender (or sometimes the old one) for a new deal. They value the house, you can pay in extra cash if you like to reduce the LTV, then they pay off your old lender and you move forward with the new one.
  • em_9187
    em_9187 Posts: 79 Forumite
    not likely to be one?

    hmmmm... not promising - may need to give them a call tomorrow.

    thank you for responses ,:)
  • kingstreet
    kingstreet Posts: 38,750 Forumite
    First Anniversary Name Dropper Photogenic First Post
    Nationwide products run for x number of years from completion.

    If you choose a three year fix, it will end three years to the day from when you complete.

    The following day, you can repay as much of the mortgage as you want without penalty.

    During the three year fixed period, you can repay 10% of the original mortgage amount each year, penalty free.

    If you have a look at your key facts illustration, section 10 reads;-
    10. What happens if you do not want this mortgage any more?

    Early Repayment Charges
    Early repayment charges are payable on this mortgage for 3 years
    I am a mortgage broker. You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice. Please do not send PMs asking for one-to-one-advice, or representation.
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