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  • FIRST POST
    • OPENSPACES
    • By OPENSPACES 5th Sep 17, 9:55 AM
    • 42Posts
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    OPENSPACES
    Early repayments of mortgages
    • #1
    • 5th Sep 17, 9:55 AM
    Early repayments of mortgages 5th Sep 17 at 9:55 AM
    I am trying to sort out my son's financial mess. He has two houses both mortgaged up to the hilt. The early repayment facility seems to be restricted to an extra 10% of the agreed repayment criteria each year. Am I correct in saying that you usually have an ability to agree larger repayments but that they would be subject to a fee? Is that fee usually a one off and what is it typically? It seems that there is little incentive to encourage early repayment of mortgages which seems crazy in a situation where personal spending is too high. I would appreciate advice on the best way to go about negotiating higher repayments with a lender
Page 1
    • zx81
    • By zx81 5th Sep 17, 10:02 AM
    • 14,091 Posts
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    zx81
    • #2
    • 5th Sep 17, 10:02 AM
    • #2
    • 5th Sep 17, 10:02 AM
    It will be the ERC specified in the terms of each mortgage.

    It almost certainly won't be negotiable.
    • beanielou
    • By beanielou 7th Sep 17, 3:58 PM
    • 48,510 Posts
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    beanielou
    • #3
    • 7th Sep 17, 3:58 PM
    • #3
    • 7th Sep 17, 3:58 PM
    There will be a fee I think.
    Best to speak to each lender & take it from there I think.
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    • copperclock
    • By copperclock 7th Sep 17, 4:19 PM
    • 217 Posts
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    copperclock
    • #4
    • 7th Sep 17, 4:19 PM
    • #4
    • 7th Sep 17, 4:19 PM
    I am trying to sort out my son's financial mess. He has two houses both mortgaged up to the hilt. The early repayment facility seems to be restricted to an extra 10% of the agreed repayment criteria each year. Am I correct in saying that you usually have an ability to agree larger repayments but that they would be subject to a fee? Is that fee usually a one off and what is it typically? It seems that there is little incentive to encourage early repayment of mortgages which seems crazy in a situation where personal spending is too high. I would appreciate advice on the best way to go about negotiating higher repayments with a lender
    Originally posted by OPENSPACES
    The longer the mortgage, the more money the banks make. Why would they want to actively encourage overpayment?
    • AnotherJoe
    • By AnotherJoe 7th Sep 17, 4:21 PM
    • 7,588 Posts
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    AnotherJoe
    • #5
    • 7th Sep 17, 4:21 PM
    • #5
    • 7th Sep 17, 4:21 PM
    I am trying to sort out my son's financial mess. He has two houses both mortgaged up to the hilt. The early repayment facility seems to be restricted to an extra 10% of the agreed repayment criteria each year. Am I correct in saying that you usually have an ability to agree larger repayments but that they would be subject to a fee?

    Not really. Usually theres a set fee as a % of the amount overpaid once you've breached the overpayment limit.

    Is that fee usually a one off and what is it typically? It seems that there is little incentive to encourage early repayment of mortgages which seems crazy in a situation where personal spending is too high. I would appreciate advice on the best way to go about negotiating higher repayments with a lender
    Originally posted by OPENSPACES
    The money they lent to him has a cost to them. They calculated that cost against the money he will pay in interest. If they just let him pay it off whenever he wanted, it would likely cost them money and they'd make a loss.

    A mortgage where he could pay it off at any time without penalty would have a higher interest rate. He would have selected a lower rate with the quid pro quo being an ERC. You are wanting to unilaterally break that agreement.

    There are calculators all over the place including this website which will tell you the trade off between ERC and cheaper payments over the long term.
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