overpayment and ERC

I have just got access to a large pot of money. It was savings I had which may of been needed for a court case but now no longer needed. Lets say maybe 60k.
I now want to overpay my mortgage but am limited to the 10% overpayment in each year without incurring Early repayment fees.
I will do a payment in two parts so that it falls within the 2 years. But that only means i can make about 28k. 
Ive been doing my numbers and even if i pay the ERC on additional money I deposit above this allowance it still seems like it may be worthwhile compared against what i would be charged for interest. This particularly the case with such low savings rates at the moment.

Do you think this sounds logical ? I struggle to see why the mortgage companies would lose money on these overpayments and i would of thought they would of charged a ERC amount so that they didnt lose out by you doing this.






Comments

  • getmore4less
    getmore4less Posts: 46,882
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    How can anyone tell if you have not provided your rates and calculations?
    you also need to consider things like can you change the terms does the erc go down at any point what rates can you get in savings etc.
  • notes1
    notes1 Posts: 16
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    How can anyone tell if you have not provided your rates and calculations?
    you also need to consider things like can you change the terms does the erc go down at any point what rates can you get in savings etc.
    Thanks, I didnt want anyone to run my numbers for me, hence didnt list them. 
    It was just a general question as seems odd that the banks would lose out in this way.
  • notes1
    notes1 Posts: 16
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    So essentially :- 

    110k now left on mortgage at rate of 1.74%. Currently paying £532 a month.
    Between now and 31 mar 2021 ERC of 2%
    then from mar 2021 till mar 2020 ERC of 1%
    Allowed about 14k to overpay a year.

    Assuming 14k + 14k = 28k paid off with no ERC and assuming remainder of the money (32k) paid off in april 2020 so 1 percent, that would only be £320 ERC to pay. So i would be saving against the 1.74% fee anyway.

    Think listing it like this makes me realise it is indeed cheaper to accept the ERC by 0.74%, unless i can get that much interest elsewhere which is quite difficult.



  • notes1
    notes1 Posts: 16
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    EDIT my above second line should say ...
    then from mar 2021 till mar 2022 ERC of 1%
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