Early Repayment Charge - is it worth it?

So I've got £52k left on my mortgage, the current mortgage rate is 2.49% and unfortunately at the time in 2017, we took out a 10 year fix,  so its due to expire in 2027. We have managed to save a lot over the last 3 years as well as overpaying max 10% of balance per year and my estimations show that I'm due to pay it off in 2023. 
Due to interest rates reducing so much, we are thinking of paying a larger chunk off our mortgage rather than leave it in savings. We have £30k in savings at the moment. 
My thinking is that even if we do overpay more and have to pay the early repayment charge of 5%, it would be better doing this than leaving it in savings earning around 1.2% a year. As we will save on the interest payments for the rest of the mortgage.
So if we paid off now within 2 years by overpaying, it would mean 2.49% over 2 years means 4.98% so would be worthwhile unless we take longer to pay off! Apologies if any confusion!
Are my thoughts here correct?


  • Sistergold
    Sistergold Posts: 2,006
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    Hello use a mortgage overpayment calculator see how much you can save by overpaying. The also calculate the early repayment charge see how much that is. Add those two up. Calculate the interest you can earn by the money being in savings or investment account and see where it make financial sense to go. 
    Initial mortgage bal £487.5k, current £266.8k, target £243,750(halfway!)
    Mortgage start date first week of July 2019,
    Mortgage term 23yrs(end of June 2042🙇🏽♀️), 
    Target is to pay it off in 10years(by 2030🥳). 
    MFW#10 (2022/23 mfw#34)(2021 mfw#47)(2020 mfw#136)
    £12K in 2021 #54 (in 2020 #148)
    To save £100K in 48months start 01/07/2020 Achieved 30/05/2023 👯♀️
    Am a single mom of 4. 
    Do not wait to buy a property, Buy a property and wait. 🤓
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