HSBC Early repayment charge

geocatwest

What does this mean in layman's terms?

The ERC is calculated as 1% of the amount repaid early, above any annual overpayment allowance, for each remaining year of the period during which the ERC applies, reducing on a daily basis. However, (after taking your allowance into account) a maximum 5% of your overpayment could be charged.

I took out a 3 year fixed mortgage for 128,500 in May 2020 and looking to move before the end of the 3 year fix.

Thanks

getmore4less

There is an example that shows how it works.

Basically proportional to the time left in days 1% per 365days capped at 5%.

Eg 1.5 years 1.5%...

phoebscook

Hi @geocatwest

I would recommend starting the process now but aiming for a completion early June as right now your ERC may be around 2% as you're in the second year but after May it should then go down to 1%. It's usually that % of the remaining balance at the time so if you've got £120k left for example your current ERC would be £2,400 but after May it would be £1,200 so it does make a difference when you decide to do it!

Pop me a message and I can assist further! 

Regards
Phoebe 

MWT

phoebscook said:

It's usually that % of the remaining balance at the time so if you've got £120k left for example your current ERC would be £2,400 but after May it would be £1,200 so it does make a difference when you decide to do it!

...after deducting the annual overpayment allowance from the £120k if not already used though...