What does this mean? Early Repayment Charge - 3% of the sum repaid until 30/04/2021 then 2% of the s

Unicorn_cottage

Can anyone explain what this means? I will be taking out a mortgage for approx. £122,000. Thank you!

Early Repayment Charge - 3% of the sum repaid until 30/04/2021 then 2% of the sum repaid until 30/04/2022

Thrugelmir

Who is your mortgage with? 

davidmcn

I expect it means that if you make a repayment (over and above your normal repayments) then the ERC will be 3% of that sum (or 2% if you do it between 30/4/21 and 30/4/22).

Unicorn_cottage

Post Office (Bank of Ireland)

pjcox2005

Broadly, I believe It means that if you sell your house before 30 April next year you'd need to pay 3% of the outstanding mortgage (i.e. as that would be repaid with the proceeds) so say mortgage was £115k, you would pay an additional £3,450.
If you sold between 1 May 21 and 30 April 22 then it would be 2% of the balance so if still £115k you would pay an additional £2,300.
Some mortgage providers allow you to port a mortgage to a new property e.g. if you were selling and buying at the same time, but it's often not guaranteed so assume you're going to make those payments if you have to sell early for whatever reason - relocating for work, splitting up with partner, outgrowing a house and needing to buy a bigger property etc.

Unicorn_cottage

Thank you @pjcox2005

touch*my*food*feel*myfork

yes if you need to end your mortgage within those time frames you would need to pay an extra % as specified on top of what was owing

Thrugelmir

The actual wording is if you fully repay your mortgage. The ERC as stated will be calculated on the actual mortgage balance at the point of redemption.