Mortgage early repayment fee

Gonk1967

We took out a £136K mortgage (2 years fixed) in early 2015 with Furness BS. When that ran out in 2017 we renewed it (£115K) but this time on a 5 year fixed rate. Again in 2022 we renewed (£65K) on another 5 year fixed rate which is due to finish in Jan 2027 with a further 4 payments on the SVR to finish the mortgage altogether.

Just been looking at the agreements and the current early repayment fee (3%) amounts to £4,080, which seems to be 3% of the original £136K loan.

In the paperwork, the purpose of the loan is referred to a "Mortgage Variation - Product Switch (Repayment Mortgage)"

Am I right in thinking the word "variation" is their way to keep the early repayment fees tied to the original loan amount or are their figures wrong?

silvercar

You don’t usually pay any ERC if on the SVR. The ERCs usually end with the end of the fixed rate.

ACG

Call Furness…

I doubt the ERC will be on the original balance.

Also you do not normally pay the ERC when on SVR.

Gonk1967

https://forums.moneysavingexpert.com/discussion/comment/81978472#Comment_81978472

I realise that, but we are thinking of moving and it may be that move happens while we're still in the fixed rate.

la531983

Again its doubtful it would be on the full balance at the initial time it was taken out. Just got a settlement amount on mine and its a %age on the current balance (Barclays) so would imagine most other lenders are the same.

Gonk1967

my last statement is dated 31 December 2025, the balance was £18,126, early repayment charge of £4,079.97, discharge fee of £120 for a total amount of £22,325,97.

It also states that "Early repayment charges on this account will no longer apply from 13 May 2027" which is after the mortgage will be paid off!!!

I think I will have to call Furness because this sounds all wrong.

Yorkie1

"Mortgage variation" when you take a new product with the same lender is called that because you originally took out the mortgage for the full duration (say 25 years) with an initial interest rate (the first 2 year fixed rate). When that came to an end, the mortgage remained in force (now with a length of 23 years), and you just took a different interest rate. That's why you don't have to do a full application each time you do a product transfer with the same lender. You already have the mortgage, it's just the interest rate (i.e. the specific product) which is being varied.

You will need to look at the mortgage offer document from 2022 to see what it says - it will have a section in it on early repayment fees. Their website fees and charges page refers to a document which isn't linked on that page for the details.

Looking at their website FAQs, it does say that if you move house before the end of the fixed term, the ERC would be payable unless you port the mortgage over to the new property.

Once you are out of the fixed rate period, then you are on the SVR and it would be very unusual, as others have said, for there to be an ERC at that point.