Early repayment charge 8 January at 12:00PM in Mortgages & endowments 4 replies 212 views

Hannie83

Hi, we’ve recently moved to a new detached house & very quickly realised it’s not for us. We want to downsize & given the costs associated with a bigger house & the current cost of living crisis seems the right thing to do. However, we are on a fixed rate of 2.08% for 5 years & only months through it. The ERC is nearly £10,000. Can we port to a smaller mortgage without having to pay penalties?

current mortgage £198,000 over 30 years house worth £270,000 75% LTV

potential house worth £245,000 & hopefully have same LTV for purchase. 

JMA74

you can usually port and downsize subject to paying a proportion of the ERC.  For example if you borrow 50% less then you pay 50% of the ERC.   You could port the same balance then use the 10% overpayment allowance to reduce the balance immediately otherwise

Hannie83

Thank you. Does the LTV need to be the same? 

JMA74

Not with most lenders when porting 

Hannie83

Thank you! Hoping the sums add up when we find a new property.