When exactly does Early Repayment Charge occur?

ironbored

Hi,

I'm coming to the end of the fixed period of my mortgage with Chelsea BS. The initial 2-year fixed period (1.99%) ends on 31st October. There are ERCs up until this point (2% in first year, 1% in second year, fairly standard).

After this, the mortgage goes to SVR at around 5.49% I think at the moment. I'm looking to remortgage as soon as the deal is up, but to minimise the number of days' interest at the high SVR, should I....

1) Send my application in before 31st October so the new deal starts sometime in November? Would I pay the ERC in this case, i.e. is it applied at application date, or start date of the new loan (as this is effectively when the original loan is 'repaid')?

2) Wait until after 31st October to send in the application and just accept there'll be a period of time where I'm paying the SVR?

Thanks in advance for any info, my main issue is getting my head around whether any ERC is determined as at application date or mortgage start date. (Tried to phone Chelsea BS to find out, but they said they had to be book me onto a phone interview with an adviser in a week's time to get that info...)

PS this all assumes I'm staying with Chelsea BS, and not moving house.

dunstonh

Its the day you convert the mortgage to the new deal. So, in your case, you can prepare in advance but specify that the new deal only applies from the end of the old one (if its the existing lender) or if you are remortgaging then specify that the mortgage is not to be changed over until after 1st November.

ironbored

Perfect - thanks!

libf

If you're staying with the same lender then you can switch online very easily.

http://www.thechelsea.co.uk/mortgages/changing-deal/index.html

"If the ERC period ends within the next 90 days, you can apply for your transfer now but it will not take place until after the ERC period has ended, unless you agree to pay the charge. Any early repayment charges applicable must be paid on completion of the transfer."

ironbored

Silly me, thought that phoning up to speak to someone would get a better answer. Thanks!