Non-portable mortgage ERC advice

Makkusu

We're currently in our 2nd year of a HTB equity loan mortgage and we're considering moving to a bigger house.

However, our mortgage is a 5 year fixed-term with Leeds and we've only just noticed that the mortgage product is non portable.

Does this mean we'll have to suffer the ERC charges if we move within 5 years - and there is 100% no way around that? Currently looking @ a £7k charge on £160k mortgage remaining.

Furthermore, I could overpay our mortgage by around £800 per month currently, would the best option be to overpay where possible so to reduce the ERC slightly too?

Thrugelmir

You'll also need to settle the HTB loan. If the property has risen in value a proportion will be due to the Treasury.

Overpaying the mortgage will reduce the ERC.

Makkusu

Yes well aware of that, we have savings to cover.

Is there anyway scenario where ERC is not applicable?

And is it simply taken from equity/proceeds?

glosoli

The early repayment charge applicable unless can port, there is no way around it I am afraid. When you took out the five year product, did the adviser ask you if you planned to move home in the foreseeable future?

When the solicitor redeems your existing mortgage, they will pay off the full redemption figure (inclusive of the early repayment charges).

Thrugelmir

The ERC forms part of the funds required to discharge the existing mortgage on completion.

ACG

I would be surprised if there was a way around it - one of the question we ask is how long you plan to remain in the property and we try to ensure the tie in period does not go beyond that.

That being said, call up Leeds and ask them if there is anything they can do to help. If you do not ask, you do not get. I would not hold my breath but worse case scenario you spend 20 minutes on the phone. Best case you save £7k.

Makkusu

Thanks for the advice.

No we weren't told at all about it by our broker (had many other issues with her also, she was very new to the career). Nobody to blame other than ourselves for fully checking though.

We will give Leeds a call up for some advice to get some solid figures together at least - bit gutted as the 2 year fixed was a better rate also, we were told the longer you lock in the better (assuming interest rises) and that's all there was to consider...

Thanks.