Mortgage ERC & Overpayment Allowance

Hi all,

Me and my ex wife are selling a property we own and is part way though a 5 year fixed rate mortgage so will be liable for early repayment charges of 3%.

The outstanding mortgage £180K but we have an overpayment allowance of £18.5K. When it comes down to pay it off would I be expecting to pay the ERC on the full £180k or the £180K - overpayment allowance of £18.5, so in effect £161.5k?

The difference is about £555 between the two values but I'm not sure which it would be based on.


  • ThrugelmirThrugelmir Forumite
    89.5K Posts
    Part of the Furniture 10,000 Posts Name Dropper Photogenic
    Overpayments would need to be made prior to redeeming the mortgage.
  • BoGoFBoGoF Forumite
    6.3K Posts
    Part of the Furniture 1,000 Posts
    Redeeming the mortgage when selling is not an overpayment so unless you have £18.5k spare to make an overpayment then it will be on the full balance.

    Even if you do have the funds to make an overpayment you would need to check your T&Cs to see how your lender calculates the ERC
  • LotakLotak Forumite
    96 Posts
    I got caught out by this.

    You have to read the Ts&Cs of your mortgage.

    I think the policy is to allow overpayments up to the limit (usually 10%), but if you were to redeem within 6 months of that overpayment, they will charge you an ERC inclusive of that overpayment.
    So, in your case, you'd get charged an ERC as if you didn't make the £18.5k overpayment.
    Current Debt (excluding mortgage) - £7,020
    Reducing £450/ month.
This discussion has been closed.
Latest MSE News and Guides

Check your Clubcard vouchers

Use our trick to extend them

MSE News

Preparing for summer

What MoneySaving things can you do now to get ready?

MSE Forum

Hot Diamonds 40% off code

Including already-reduced outlet stock

MSE Deals