Early repayment charge

angle6

Hi

I took two years fixed remortgage with one of the bank couple of years ago. JUst going through the papers and found out that the bank charged me an early repayment charge each year within the fixed term. The sum is four figures altogether. is this correct, can bank charge that kind of money. My understanding was if I take my mortgage to another bank before the end date, an early charge apply. Please advise.

Thank you

angle6

roonaldo

Yes they can, to avoid paying it you dont pay off the mortgage within the tie in period.

angle6

i didnt understand it, could you explain it please

dunstonh

is this correct, can bank charge that kind of money.

Yes they can as that is the sort of cost they suffer when you repay early.

i didnt understand it, could you explain it please

You bought a special deal that the bank had to arrange financing for. The investors funding your deal still have to be paid even if you repay early. Either that means the bank continues paying for you or has to pay a penalty. Either way they would end up out of pocket if they did not pass the charge back to you.

You agreed this contract when you bought the mortgage. So, it should be no surprise.