Redemption Penalty - Are They Legal???

prodigymad

Hi all, this is my first post so please be gentle

From what I can see about the ERC claims it seems to be regarding ending a fixed rate whilst still being on it.

For example:- A 2 year fixed rate deal at 5% being ended during year 1.

However, what happens in this scenario:

Fixed rate for 2 years at 5% and then moving onto the SVR for a further 3 years after. If the mortgage was ended in year 4 (2 years after the agreed fixed rate) then should an ERC still be charged. Surely the "risk" for the lender has been covered during those 2 years fixed.

Thanks all, Paul