Is it possible to Pay 10% off the mortgage and then get an ERC on a lower amount? 8 May 2020 at 3:32PM in Mortgage-free wannabe 3 replies 91 views

Username_Bob

Hi there, I am in a position to pay off my mortgage, however, looking to try and save money on how to do it.
The mortgage is close to £150k, I pay about £300 interest a month on average and my current deal as about 18 months to run.
I never make any over payments so I do know I have my 10% available to pay.
My question is, if I pay 10% next month and bring it down to around £135k, can I request a settlement figure, which will be on the £135k only and only pay the ERC on £135k? Or will they advise as I have already paid the 10% over payment, I will incur a further charge?
Just looking for the best way to make a saving, I dont want to let the deal run and pay the interest as that will end up more than the ERC or very close.
TIA

A_Frayed_Knot

I would imagine so, however you would need to check the t&c's of your mortgage, the ERC %'s should be on it.

Normally, if say a 3 yr deal, then its, 3% ERC in year 1, 2% in year 2, and 1% in your last year.

Cannot imagine you would incur a further charge, they should base the ERC on your balance when you ask,  I got my figure over the phone when I asked about clearing my mortgage (just out of interest).

So some sums need to be made, reaching for the calculator, then decide.

Congratulations on being able to pay off such a large amount.

Should also state that the 10% overpayment allowed is usually the figure at the start of the year, which may have been a little more than your mortgage is now.

So maybe you need to ask just how much you can o/p without incurring a charge.

Username_Bob

Thanks for that info, I think I will call them on Monday (if I can get through) and ask for a settlement now and also if I pay my 10% first. 👍

A_Frayed_Knot

Mind and ask what the 10% figure would be allowed before a charge is made.

Good Luck.

I got my figure - paid it, then weeks later received a letter saying I had overpaid too much, but since it was a low over/overpayment they would waive the charge !!!  Just as well or they would be told it was them that gave me the figure in the 1st place.