Early Repayment Charges

penners324 · 5 April 2022 at 7:39AM

Alternatively, port some of the mortgage over to the new property. ERC is still payable on the part of the mortgage repaid though.

kingstreet · 5 April 2022 at 12:02PM

CTPW62 said:

We're in Year 2 of a 7 year fixed term deal and are about to sell and downsize. There won't be any mortgage required on the new property. Barclays are going to penalise us and charge the full ERC (circa £7k) - we have challenged but they are not prepared to negotiate, despite having been a Barclays customer for 40 years. Does anyone have any advice around how we might be able to negotiate a lower settlement?

Fixed rates are funded in the money market based on rate swaps. For Barclays to lend to you, a third party agrees to provide the rate for the agreed period. The ERCs are set at that time and are payable to the third party to compensate them, not to Barclays. Hence your relationship with Barclays has no bearing on the outcome.

t1redmonkey · 5 April 2022 at 4:48PM

I'm in the same situation as you but with TSB (just sold house, hoping to buy a cheaper place that won't require a mortgage). Unfortunately you do just have to pay the ERC. However as others have said (and I have done), you can overpay the mortgage as much as possible to reduce the ERC. I have knocked a few hundred off my ERC charge by doing that.