Paying off mortgage without an erc

AmboGuy

Hi all,

im in the fortunate position where I am able to pay off my remaining 15 years on my mortgage of just under £40,000. It’s with Nationwide and I’m on a fixed rate of 2.44%. I have an erc which would cost me around £1000. My question is as this current mortgage expires in October this year could I Pay it off at expiry and get away with no erc? Would I have to switch to another product (still with Nationwide) with no erc and then just pay it off that way? Would they charge me to switch products at renewal if it’s still with them? 

Sorry I’m not too up on Mortgages so not sure how feasible any of this is. 

billy2shots

Do the maths and see if it’s more cost effective to pay it off now and pay the erc or continue paying interest until your mortgage product  runs out. 

Based on what you have said above it ‘looks’ like it’s cheaper to wait. once your current product runs out in October it will revert to their variable rate (you don’t need to buy another product) then you can pay it all off then. 

Thrugelmir

You can overpay now up to the limit you are allowed. When the fixed product term ends. By default you will move onto the SVR. At which point you can redeem the mortgage entirely ERC free. 

AmboGuy

Okay thanks all. With regards to overpaying per month I am allowed to overpay up to 10%. Sorry if this is a stupid question but is that 10% based on what I would pay overall in the year or just 10% of my monthly mortgage payments?

billy2shots

You will have to read your particular products t&c’s but it usually 10% of your remaining balance a year. 

You may may be able (most products allow) to pay that 10% off in one go. 

if you have already been making overpayments then check with the bank how much you have left this year that you can overpay and do it in one hit straight away. You will then have to change your monthly payment to the ‘normal’ amount each month. Overpaying monthly after using your annual entitlement up would incur penalties.