Timing a Santander mortgage repayment to reduce ERC

Rural_Puppy

Hello
Quick question, I hope!
I have a Santander BTL mortgage. ERC of 5%, approx 200k outstanding.
I have just accepted an offer on the house. I would like to try and reduce the ERC amount if possible by reducing the balance prior to redemption.
I can overpay by up to 10% each calendar year. I have some capital available and would intend to make a 10% partial repayment once missives are concluded.
Question relates to timing the repayment with the redemption following completion.

If I repay 10% of the balance, is it correct that this should reduce the amount of the ERC immediately?
Is there a specific timelag required between the 10% repayment, and the moment my solicitor sends over the funds to redeem the mortgage?
Many thanks!

Exodi

You wouldn't be liable for ERC if you made an overpayment while you still have the product.

It may be entirely irrelevant though as lenders usually outline maximum amounts they'll charge in the case of early repayment and if you're settling a large amount, you may be paying this amount regardless. I'd check your offer as the first port of call.

There's also no harm in just calling the bank.

Rural_Puppy

Thanks for the reply. I agree that there is no ERC for making a maximum10% overpayment.
The issue is that I have just accepted an offer for the property, and when the sale completes the mortgage will be redeemed, with an ERC to pay.
I am trying to reduce the balance before then to cut the amount due in ERC on completion.
I want to know whether there are any time limits I might need to adhere to when making the overpayment. Thanks!

Thrugelmir

ERC will apply to the balance owed on redemption of the mortgage.

Exodi

Rural_Puppy wrote: »

Thanks for the reply. I agree that there is no ERC for making a maximum10% overpayment.
The issue is that I have just accepted an offer for the property, and when the sale completes the mortgage will be redeemed, with an ERC to pay.
I am trying to reduce the balance before then to cut the amount due in ERC on completion.
I want to know whether there are any time limits I might need to adhere to when making the overpayment. Thanks!

I understood what you meant, and in the situation you described, there are no timelines though out of respect I would pay this before the redemption paperwork is submitted.

I just meant to check your original mortgage offer paperwork because it's relatively common that there are often maximum amounts stated on the maximum ERC you will pay. Eg if the maximum ERC you will pay is £5,000 and it works out that it wouldn't make a difference whether you overpaid now or not, then you can sit back and use that money for something else for the time being.

strawb_shortcake

I've just made a 10% mortgage overpayments to Santander, the ERC reduced as soon the overpayment showed in my account. I think the ERC reduced by £500 or so.