Can I pay off mortgage near end of fixed rate?

tortoiseshellcat

Hi I'm very fortunate in that I should be in a position to pay off my mortgage shortly. I took out a 20 year mortgage with a two year fixed rate. What I'm not sure about is can I pay it off at the end of the two years without penalty or does it mean I have to pay a penalty if I pay it off before the 20 years?
Is it normal for people to take out a new mortgage when their fixed rate is finished or do you stay in the same mortgage?

I hope that makes sense...

DJ_Mike

Check your mortgage terms and conditions for something called "Early Repayment Charges". It would be very unusual to have a fixed term mortgage that doesn't have these during the fixed term itself (i.e. before you revert to your mortgage provider's SVR).

So most likely you will incur a penalty - however if the amount of interest you'll pay during the rest of the fixed term is higher than the penalty, sometimes it's worth paying the penalty instead. That's entirely dependent on your situation though - so check your sums before deciding.

ACG

You should have a KFI and a Mortgage offer, it will confirm in there what the date it where you will incur early repayments charges but it would normally tie in with the (2 year) deal you took out, and not the 20 years.

tortoiseshellcat

thanks, in my mortgage offer it says if I repay in full before 30/9/14 I have to pay 3% on the amount repaid and if I repay in full before 30/9/15 I have to pay 2% on the amount repaid. ( I thought I read somewhere though that if you repay within three months of the term ending no fees are chargeable. )

DJ_Mike

What's the fixed interest rate on your mortgage?

ACG

The 3 month you are referring to I think is if you switch products but remain with the lender.

I would go off what you have in writing as thats the only thing that can be evidenced in a court of law.

tortoiseshellcat

Thanks that's what I thought, still A lot less than continuing the interest on the mortgage.

The fixed rate is 2.79%

DJ_Mike

I would wait till October to pay it off in full then.

dimbo61

You might be able to pay 10% off now if your find rate deal allows this but you have not got long to wait before you can become
MORTGAGE FREE

DJ_Mike

Indeed, you could certainly overpay if your mortgage allows for this but check your KFI first. Less than 3 months to wait either way.