Santander Mortgage Early Repayment Fee

jlew80

Hi

I currently have just over 100k left on my mortgage.  It's a fixed rate so I have an ERC of just over 5k if I repay within the next 5 years.

In the next few weeks, I am due to receive £100k which I want to use to pay off as much of my mortgage as I can.

Does anyone know how this would work?

Would the 5k ERC just get added to my mortgage balance as soon as I paid the £100k?

Should I put the 100k in a savings account and wait until the 5 years have passed?

Any advice welcome!

Thank you

george4064

If you wanted to redeem your mortgage in full you would have to speak with your mortgage provider anyway, who will provide you a firm early redemption quote including the charges and how to make payment.

If you want to explore the savings account route you will need to compare the rate you can get with a suitable savings account vs the mortgage interest cost, but also factor in the early redemption charge (once you have a firm figure).

Another option would be to stick all the money in premium bonds (max is £50k, do you have a spouse you can split the money across two?) and make the maximum overpayments you can each year without triggering the ERC (usually 10% of mortgage balance at the start of each mortgage period year). Then arrange with your mortgage provider to repay the outstanding amount when the fixed period is over.