Early repayment charge

Retriever45

Can anyone tell me what they understand by the following clause with regards to Early Repayment Charges:
6% of the amount repaid until 01/11/2015

Jimbo1976

Most lenders will allow you to pay a certain percentage of your mortgage balance off each year without incurring an Early Repayment Charge (ERC). This tends to be circa 10% but does vary. The ERC would be triggered if you remortgaged to another lender or made a lump sum reduction.

If your lender does allow you to pay of 10% ERC free then you would pay a 6% charge on anything repaid over this amount.

Eg you owe £100,000, and you can pay off 10% ERC free. So that leaves a 6% charge on the remaining £90,000 ie £5,400.
If you wait until 2/11/2015 then you would not incur the ERC.

Retriever45

Thanks for your reply. I understand that as I have sold my house I will have a 6% early repayment charge. The wording is very confusing - reading it seems to imply 6% of the amount repaid (is this the amount I have already repaid of the mortgage). Or is this 6% of the amount I still owe. Thanks for any clarification because the way I am reading it seems to mean 6% of the amount I have paid off of my mortgage.

kingstreet

The early repayment penalty is 6% of the amount you will repay by selling the property.

Jimbo1976

It applies to the amount that is currently outstanding. ie 6% of your current balance less any allowance that the lender gives you. Any amount that you have already paid off wouldn't be charged (though if you have paid lump sums off your mortgage in the current year, these will be deducted from your allowance)