Selling house before morgage term ends

Moneysavymummy

hiya I am looking at selling my house the start of next year; my morgage however doesnt end until August 2019(Barclays tracker 2 year interest 2.1%). I won't be able to transfer my morgage to new house as my partner also has a house to sell ideally after mine(as his house is bigger so we can move into his and it would be a squeeze in mine).
I have been looking at early repayment charges and my morgage states the charge is
1% of the balance repaid for the 2 year period.

What exactly does this mean? my start morgage balance was 85000 and now stands at 83100.

thanks in advance

enthusiasticsaver

The balance repaid is £1900 so 1% of that is £190. You ought to double check on that though as a lot of lenders work out ERPCs as percentages of mortgage amount not the balance repaid. If that was the case with yours the charge would be £850 being 1% of £85000

Moneysavymummy

Ah great that is what I thought, I have checked on Barclays website and that is what it states for my morgage(2year tracker). I have been overpaying my morgage so I guess it's not a good idea to do that if I am intending on selling soon.

thanks

Tom99

enthusiasticsaver wrote: »

The balance repaid is £1900 so 1% of that is £190. You ought to double check on that though as a lot of lenders work out ERPCs as percentages of mortgage amount not the balance repaid. If that was the case with yours the charge would be £850 being 1% of £85000

[FONT=Verdana, sans-serif]1% of £1,900 is £19 not £190 that would be 10%.
[/FONT]
[FONT=Verdana, sans-serif]But no bank charges ERC based on the capital already repaid, the would mean a very low ERC the month after you started but increasing as the mortgage got older which is the complete opposite of how it usually works.[/FONT]
[FONT=Verdana, sans-serif]
[/FONT] [FONT=Verdana, sans-serif]It means the balance repaid when you pay off the mortgage not your capital repayments to date. So 1% * £83,100 = £831.

[/FONT] [FONT=Verdana, sans-serif]You are usually allowed to overpay without incurring the ERC so you may be able to pay off a lump sum a few weeks before you redeem the mortgage[/FONT]

dimbo61

Carry on overpaying the mortgage every month

Moneysavymummy

Thanks everyone this makes more sense now. I may have to hold off putting my house on the market a bit to save paying the ERC. After talking to my partner his morgage is up for renewal in August too. When would you say would be the best time to put houses on market if looking to complete in August(as we don't want to miss the spring/summer window of houses we want to buy coming on the market).

ACG

You can usually overpay by 10% without charge and the remainder would incur the 1% charge.

So £85,000 - £8500 = £76,500 x 1% = £765. It may be less than that as your balance has come down. There is also a deeds release fee charge of around £100.

The erc would be paid from the equity once the house sells. You do not need to find the money yourself unless there is not enough equity in the property.

Moneysavymummy

Thanks. Might be best to hang on for a few months extra as hoping to have as much equity in property for new house as possible. I didn't realise ERC were so much:s.