Maybe mortgage free... how to avoid early repayment charges?

Karen567

Ideally, we would like to pay our mortgage off in the coming months, in a lump sum payment, approx £91,000.

Is there a way we can do this WITHOUT paying the penalty charges for early repayment? (We are with Halifax)
For example, can we pay off say £90,900 and keep £100 on the mortgage at £10 a month, when our mortgage would have been up for renewal anyway? (July 2018)

Thanks in Advance

bexster1975

Hi

Great to hear you have the funds to pay off your mortgage shortly!

As for ERC, you need to check the rules for your product. Normally, whilst ERCs apply, you can pay 10% of the loan outstanding as of Jan first of that calendar year without penalty. As your product is up in the next year anyway, any fee may be small. Call Halifax and ask for a quote as to ERC that would apply. I don't know if ending the mortgage is the same, but Halifax lets you change deal within the last three months of any current deal penalty free. That would mean you could potentially pay it all off on May 1st. Depending when the cash will become available to you, this isn't really very far off. Could you not pay the £9000 off as your 10% this year when you get the cash, then another £7000 something on Jan first and finish the deal and avoid all ERCs? Depending on your mortgage rate you may get savings rates equal or above mortgage rate on your cash and so make a little money.

Also, it's worth considering whether once you pay the mortgage off you will still have an emergency fund. It's also worth thinking about whether you may ever want another mortgage as extending what you have already is likely to be easier than re applying.

Good luck whatever you decide

Bexster