Mortgage charges

Adrian89876

If you have a 5year short term mortgage agreement for say £300k . If you then decide to sell your home with 4 years left on the deal. As part of the deal you can pay an extra 10% each year. So when when you sell your house and the payment is made. The bank calculates what is owed including early repayment charges.

My question is’ Does the bank accept the first £30k (i.e 10%) then calculate the money owed £270k then the interest over 4 years or is it just on the £300k. This could really affect the interest people pay or have been charged. Are banks being really sneaky and making a lot more money out of us. I don’t know who to ask or how to check 

[Deleted User]

It's charged on the outstanding balance, which would be lower than £270k, as you are also required to make monthly repayments.

The ERC is also not the equivalent of 4 years interest - it's the fee specified in the terms.

So nothing sneaky.