Redemption Penalty - Are They Legal???

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  • Hi all, this is my first post so please be gentle ;)

    From what I can see about the ERC claims it seems to be regarding ending a fixed rate whilst still being on it.

    For example:- A 2 year fixed rate deal at 5% being ended during year 1.

    However, what happens in this scenario:

    Fixed rate for 2 years at 5% and then moving onto the SVR for a further 3 years after. If the mortgage was ended in year 4 (2 years after the agreed fixed rate) then should an ERC still be charged. Surely the "risk" for the lender has been covered during those 2 years fixed.

    Thanks all, Paul
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