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Over-Over payment - Worth it?

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Comments

  • Rob_Mogs
    Rob_Mogs Posts: 156 Forumite
    Sixth Anniversary 100 Posts Combo Breaker
    julicorn wrote: »
    Not worth it, that repayment charge is too high. That would work out as a £2,190 penalty, so you'd need to make at least that in your difference in interest recuction.
    If your monthly payment amount stayed consistent, you would 'save' around £580 in the first year on interest, so would need 4 years to make up that penalty charge. That is not even taking into consideration that you can make money off that £20k in savings accounts instead. Really, even at the current relatively poor rates, you can get instant access accounts for 1.3%, meaning that really you're only saving 1%, or around £200 in that year, so way off the penalty you would be paying unless you're tied into this specific mortgage product for over a decade. And even then, it would be better to put your money into fixed savings accounts, which should pay a similar amount of interest as you're paying on your mortgage.
    (Figures might be slightly off, put I'm 99% confident it's not worth it).

    Instead, it would be better to earn some interest in a savings account and then just pay that off your mortgage as a lump sum when your fixed term ends.



    I'm sorry but I'm really confused with your maths, 3% of £20000 is nowhere near £2190! it's £600.


    Are people trying to say that it's 3% of the remaining balance is the ERC?


    I'm led to believe it's 3% of what you pay off.
  • julicorn
    julicorn Posts: 2,526 Forumite
    Sixth Anniversary 1,000 Posts Name Dropper Photogenic
    Check with your lender. With our mortgage, it's based on the remaining balance.
  • Rob_Mogs
    Rob_Mogs Posts: 156 Forumite
    Sixth Anniversary 100 Posts Combo Breaker
    julicorn wrote: »
    Check with your lender. With our mortgage, it's based on the remaining balance.


    Pretty confident ours is of the amount you pay.
  • Rob_Mogs
    Rob_Mogs Posts: 156 Forumite
    Sixth Anniversary 100 Posts Combo Breaker
    julicorn wrote: »
    Check with your lender. With our mortgage, it's based on the remaining balance.



    SO if you mistakenly pay off £5 or £10 too much as an OP you would get charged 3% or whatever your ERC is?


    Seems somewhat unrealistic to me as a slight miscalculation could cost someone thousands for the sake of a few quid.
  • Mine is based on remaining balance after the allowable 10 per cent.
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