Post of Early Repayment Charge

Tomsdad67

I have been looking at the post offices current trackers. They refer to an early repayment charge of 2% of the sum repaid for 12 months from completion.

What does this mean in practice??

If I have a mortgage with a monthly payment of £1000 for ease of figures and I decide to remortgage after 8 months because the BOE Base rate starts to go up. I would have paid £8000 does that mean my penalty would be 2% of £8000 i.e £160. This seems very low

opinions4u

If you remortgage you would have repaid the whole debt (or rather your new lender will have repaid the whole of the Post Office debt).

So you'd pay 2% on the full amount of mortgage (minus any capital repaid via normal monthly payments) during the first 12 months.

e.g.

Borrow £200k
Payments £8k

Balance £192k
Interest £4k

Balance including interest £196k

2% of £196k = £3,920 penalty.

(figures are for illustration purposes only and o4u takes no responsibility for giving out duff numbers)

Tomsdad67

Most helpful

Thanks