Early Repayment Charges
For certain mortgages there is an early
repayment charge if you pay your mortgage off in full, or
part, within a specified period. If it applies, it is usually
during the period of any special deal, such as within a fixed
or discounted period. In some cases it can carry on longer
than the special rate period, this therefore is committing
you to their variable rate once the deal is finished.
At first glance these rates look extremely
attractive because they usually offer a very low interest
rate, however, the lender is keeping you locked in to them
for longer, so either you will have to go back to the standard
variable rate with them until the lock in period has finished,
or you will have to pay and early repayment charge to leave.
The early repayment charges are not normally cheap and can
be as much as 5% or the mortgage.
Our advice will normally be to avoid
any rate, where the early repayment charge runs beyond the
end date of the special deal that you would get. This then
gives the freedom to shop around for another competitive deal
when yours finishes. This is something else we could help
you find. But sometimes there is no alternative than to have
an early repayment charge period run on for longer than your
special deal, but we will try to avoid it.
Some mortgage rates have no early repayment
charges at all and these are good if you are looking to make
extra payments or are likely to repay the loan short term.
Some lenders may have early repayment charges with their products,
but they will still allow you to pay up to 10% of the loan
per year without incurring any of the early repayment charges.
Your home may be repossessed
if you do not keep up repayments on your mortgage.
Details
of our fees can be found here.
The FSA does not regulate Commercial
Mortgages or some forms of Buy to Let Mortgages.
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