avoiding early repayment charges- is this possible?

tc69

Hello,
I have a mortgage deal ending on 1 May 2021, with an early repayment charge of 3% on the balance if the mortgage is repaid before that date. The lender also allows me to transfer on to another mortgage product 4 months before the deal ending, so I think that means on 1 Feb 2021, I guess that means I can apply to go on their SVR product, or any other mortgage deal without early repayment charges from Feb onwards. So is it feasible for me to transfer on to another mortgage product in Feb 2021 with a view to repaying the whole mortgage in March 2021? Is this a legitimate way of avoiding the early repayment charges?

This situation has arisen because I am thinking of selling my property, taking advantage of the stamp duty holiday (which ends on 31 March 2021) and the current interest in the property market. However, I would like to avoid paying the early repayment charges for my current mortgage, if that is possible. My lender is Santander.

Many thanks!

gm12

I think that you can choose your new product in the four month period, but it would start after your current fix ends in 1st May? That is the case with my lender (NatWest) anyway..,

If you would be buying a new property can you port?

tc69

Oh ok- that makes sense! Unfortunately I won't be able to port the mortgage.

[Deleted User]

Santander i think allows you to ditch the fixed rate and avoid erc if applying up to 6 months in advance of the rate finishing.  Only counts if you stay with them but lets you put the whole mortgage on 1 product .

Otherwise no, there is no way to avoid it. Santander are one of the most generous lenders in this area already

Thrugelmir

Why are you unable to port the existing mortgage? 

tc69

Thanks for the comments. I am leaving the country so not planning to buy again so won't be porting the mortgage. Deleted_User you seem to be suggesting I could avoid ercs if I switch to a different product within 4 months of my fixed rate ending (that is the earliest I can switch with santander). Does the new rate kick in immediately or do I have to wait until the end of my scheduled period of the fixed rate before the new rate kicks in? In my situation, it would make sense to be able to switch to a svr without erc immediately within 4 months of my fixed rate ending. But someone above commented saying that the new rate would only kick in after my original fixed term had ended. Thanks for any help! 

Thrugelmir

What's your current product interest rate? 

tc69

1.59% is my interest rate

HCIMbtw

Typically no. ERC's are a contractual obligation that need to be paid and it is not in the banks interest to give you a pass. 
If you speak with the lender they will be able to tell you your options. 
If porting isn't an option can you consider ways to hang on to the property for the term?are you able to let it? (could be a breach of mortgage conditions). When you come off the fixed rate period you will then be on a higher SVR from the lender and that will cost you more per month.. so might just have to suck it up if you want to get done. 

Thrugelmir

tc69 said:

1.59% is my interest rate

With Santanders SVR already at 4.34%. Any saving is going to be minimal over a couple of months. The SVR could edge higher too in the short term. 

blue_max_3

You can usually pay off up to 10%pa of the mortgage, so you could pay off that before you redeem. It will save you 10% of the fee at least.