Overpay NatWest mortgage to reduce ERC?

steve866

If I overpay (I can do up to 10%) will that then reduce the ERC if I remortgage?

propertyhunter

Yes, I did this myself last year when I was selling my old property in the middle of a fixed term.

Are you remortgaging in the middle of a fixed term? If so, is there a reason why (e.g. trying to take advantage of a low rate now for the next 5 years before your current mortgage deal ends)?

No ERC should be payable though if you are outside of your fixed term (double check your paperwork to be sure). Alternatively, you can apply to remortgage up to 3-6 months ahead of your fixed rate ending, and then complete once it does. Get a broker for advice. 

Thrugelmir

Yes as the ERC is calculated on the balance outstanding. 

steve866

Thanks both. I need to take some equity out and it’s time sensitive. I did consider waiting (I can apply for new deals from June) but NatWest don’t do the longer term I wanted and with interest rates going up it felt like it was worth taking the hit.

When I spoke to them they said the ERC would be based on the balance at the start of the year minus and standard payments and any overpayments wouldn’t help reduce the ERC. That doesn’t sound right to me but am struggling to find clarity.