early redemption charge question

motomoto_2

hello

I'm new to this board and have a question I hope someone might be able to help with please ?

I have been making o/p on my mortgage with a view to clearing it early however I have a early repayment charge of almost £1500 for the life of the mortgage ( it was a 25 year fix ) so i'm unsure if there's anyway round this ? i.e. can i reduce it so that it is just a nominal amount or something ?

thanks in advance

dunstonh

Many mortgage lenders allow a certain amount without triggering the ERC (or pro-rata charge if you exceed it). So, you need to ask your lender.

motomoto_2

Hi there

I don't think I've explained it too well. I am making overpayments each month and without any penalty but if I keep making the same o/p the mortgage will be cleared in 4.5 years and there's 18 years and 2 months of the term left. So is there a way of having a very small nominal amount left on the mortgage for the remaining term to avoid having to pay the charge which is almost £1500 ?

Thanks

Dave_Ham

It wholly depends upon the lender/product you are on, unfortunately no-one on here will be able to answer definitely.

Many lenders have 10% per year maximum overpayment, before the ERC is triggered so best to check with lender sooner rather than later.

TrickyDicky101

What does the relevant section of your mortgage agreement state?

I wasn't aware that you could source any 25 year fixes - would you mind stating what rate of interest you are paying?

motomoto_2

I'm not allowed to overpay more than £500 per month but since I am overpaying less than this each month if the term finishes earlier than expected then is it inevitable that I have to pay the ERC or can I leave a balance of £100 for the remaining term ?

my rate is 5.15 %

ACG

Ask the lender.

We can all second guess but that wont help you.

ViolaLass

Are you sure the rate is fixed for 25 years? I've not heard of that length of deal before.

Ronaldo_Mconaldo

A 25 year fixed mortgage at 5.15%. That's nuts.

motomoto_2

I'm reluctant to ask the lender because its been so difficult to get any information out of them at all ! When I called to ask if I made the maximum overpayment ( and of the course the interest rate remains the same for the life of the mortgage ) when would be the final repayment be ( I had worked it out myself but I just wanted clarification that i'd worked out the correct date ) and they wouldn't tell me over the phone - I had to put it in writing and await a written reply.

I would prefer to be in the position of knowing my options before asking them as if they say there's no way to avoid paying it then how do I know that they aren't fobbing me off ?

motomoto_2

yes i'm sure its fixed for 25 years ( thats why i chose it ) but why is it "nuts " ??

" Ronaldo Mconaldo A 25 year fixed mortgage at 5.15%. That's nuts."