Early Repayment Charges

BaconRibs

hi

i was wondering if someone cold advise me on Early Repayment Charges. Ive had an interview with the westbrom and was surprised that there was an Early Repayment Charge if i wanted to pay the mortgage in full within 4 years of a 5 year fixed rate. The charge is 5% which equates to about £7000 if i wanted to pay my mortgage off early.

I would like to know if this is the norm with Lenders or if there are lenders out there who don't charge at all?

Thanks in advance

Thrugelmir

That's normally an ERC to pay if the mortgage is redeemed before the fixed term expires. All part of the deal you signed up to.

Lenders borrow funds are fixed rates themselves to protect their margins. So levy the penalty to protect themselves.

Yorkie1

If you take out a fixed rate, it is normal for there to be an ERC. This is, broadly speaking, because the lender gets the funds from somewhere else and there's a charge to the lender from that other company if the funds are repaid early.

Usually, ERCs last for the whole period of the fix rather than a shorter period as described in your post.

I am not a mortgage broker so don't know if there are any fixed rate products without ERCs.

kingstreet

You can find products without an ERC.

Research the market, or get a broker to do it for you.

FWIW there are many products with tapering ERCS, so as each year passes, the ERC falls. 5/4/3/2/1 is quite popular on five year fixed rates.