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Overpay to reduce penalty
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lky2k23
Posts: 302 Forumite


I've got a 4% mortgage I'm going to exit when I move homes in the near future. I have to pay 3% of outstanding as early repayment fine.
If I over pay 10% I'm allowed to before I exit, I'll reduce the total amount owed and therefore my 3% penalty - right? I have the 10% in my account now.
If I over pay 10% I'm allowed to before I exit, I'll reduce the total amount owed and therefore my 3% penalty - right? I have the 10% in my account now.
Just have a little faith
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Comments
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Overpaying the mortgage will reduce the ERC penalty. As it's calculated on the amount you owe at the point of redemption.
With an interest rate of 4%. Beneficial to overpay your mortgage in any event.
When you move house porting your existing mortgage may be an option. So possible to avoid paying an ERC and letting your mortgage run it's product term through to expiry.0 -
Thrugelmir wrote: »Overpaying the mortgage will reduce the ERC penalty. As it's calculated on the amount you owe at the point of redemption.
With an interest rate of 4%. Beneficial to overpay your mortgage in any event.
When you move house porting your existing mortgage may be an option. So possible to avoid paying an ERC and letting your mortgage run it's product term through to expiry.
Unfortunately not able to port due to working contract change.
Thanks. I'm unsure why the couple of mortgage experts didn't suggest overpaying with my new extra deposit.Just have a little faith0 -
Like many things with Lenders it's rarely that simple.
Check the notes with this Halifax example
http://www.halifax.co.uk/mortgages/mortgage-information/early-repayment-charges/
Also this Barclays one
https://www.help.barclays.co.uk/faq/mortgages/repayments-rates/overpayment-charge.html
Check with your own lenderI am a Mortgage Broker
You should note that this site doesn't check my status as a Mortgage Broker, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.0
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