Over-Over payment - Worth it?

Rob_Mogs

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

Check with your lender. With our mortgage, it's based on the remaining balance.

Rob_Mogs

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

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.

sitesafe

Mine is based on remaining balance after the allowable 10 per cent.