early redemption charge question

kingstreet

motomoto wrote: »

because it says that the ERC is applicable until 2032

Yes and that probably deals specifically with a full redemption by lump sum.

You need to ask your lender;-

"If I overpay each month within the contractual parameters I am allowed and as a result the balance falls to nil, why would I then have an early redemption penalty to pay?"

In my opinion, if you overpay within what is allowed and that repays the mortgage early, the lender cannot apply a full settlement ERP as that would not be within the terms of the contract.

kingstreet

dunstonh wrote: »

In the late 90s, there was a clamour in the media to get lenders to offer very long term fixes. It was following the high interest rates of the mid 90s. They never took off but a few lenders did offer 10 and 25 year fixed rates.

I remember Bear Stearns in 90/91 offering a 25 year fix.

Odd to think they will be ending in the next year or two. God I'm getting old! :eek:

motomoto_2

the ERC is an amount but now that i've checked back it seems to have slowly decreased - does this mean if it is 3% of my balance that if I continued to overpay monthly until the balance is zero that the ERC wouldn't be applicable but if I pay the full lump sum off as one payment there would be a ERC ?

Does that sound right ?

kingstreet

motomoto wrote: »

the ERC is an amount but now that i've checked back it seems to have slowly decreased - does this mean if it is 3% of my balance that if I continued to overpay monthly until the balance is zero that the ERC wouldn't be applicable but if I pay the full lump sum off as one payment there would be a ERC ?

Does that sound right ?

That's exactly the point I was making.

You have two contractual issues. The first is your ability to overpay within limits without penalty and the second is an early redemption penalty on repaying the mortgage, in full or in part.

IMHO repaying the mortgage by overpaying within those parameters should mean the ERP ends naturally.

Like I said though, "horse's mouth" not pixels on a screen and speculation.

ViolaLass

It sounds plausible but I would check that with the bank to be certain.

Thrugelmir

motomoto wrote: »

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

Suspect that they'll catch you one way or the other. As you will still be required to pay the standard monthly amount. Which will result in your repaying the mortgage early. Look on the brightside. You'll have saved yourself a fortune in interest in doing so. £1,500 is a small amount when compared to the amount of interest you would have paid.

motomoto_2

I think I'll just give them a call ! Thanks everyone for your replies though !

marsman802

Woolwich 10-yr fixed @ 3.99% on a 70% LTV and a £1500 fee.

I pay 3.99% for a 4yr fix currently that I took out in 2011 on the same LTV with Santander.

Things have become cheaper..........