Is ERC charged every time overpayment is made?

SuzieGirl

Hi all

I have worked out that paying a large lump sum off my mortgage now will be worth paying the ERC rather than keeping it in the bank.

What I want to know is, if I decided to pay another overpayment or even remortgage elsewhere during my current mortgage deal will I pay the ERC again?

Thanks for your advice

glosoli

If an early repayment charge is applicable then it will be a percentage of the amount you pay off, so for example if the early repayment charge is 3% and you paid off £10,000, your erc would be £300, and then if you made the same payment in 6 months then again it will be another £300.

Out of curiosity would you mind posting your figures? i.e balance, interest rate, erc, and the amount your paying off?

Thrugelmir

Maybe worth timing the over payments to avoid paying the ERC.

SuzieGirl

glosoli wrote: »

If an early repayment charge is applicable then it will be a percentage of the amount you pay off, so for example if the early repayment charge is 3% and you paid off £10,000, your erc would be £300, and then if you made the same payment in 6 months then again it will be another £300.

Out of curiosity would you mind posting your figures? i.e balance, interest rate, erc, and the amount your paying off?

Mortgage £98,000
Interest 3.39% with just over 2 years to go on my 5 yr deal
17 years left on my mortgage term
Currently paying £635 ish per month
ERC is 3% now and 2% after 31st March
I have £40000 lump sum

I thought I would pay the maximum allowed this year now which is £9800 and the rest after 31st March.

The reason for the lump sum is from my pension as I took early retirement because of ill health. I need to reduce my monthly outgoings and also not have too much in savings as I may need to claim benefits. My annual income is being reduced by around £4000 per year.

getmore4less

£40k will last you over 10years of reduced income..

if planning to claim means tested benefits consider the deprivation rules.

dimbo61

You are not claiming benefits yet so if you want to pay 10% off your mortgage before the end of march that is your business