Early Repayment Charges (ERCs) are applied to many special mortgage deals, such as fixed rates, capped rates and discounts, for those wanting to pay their mortgages off early.
An ERC is payable if you choose to switch mortgages or pay it off before the end of the agreed period. So, for example, if you have a five year fixed rate, you will have to pay an ERC if you want to get out of that deal within the first five years.
Be aware of early repayment charges
Early Repayment Charges (ERCs)
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Be aware of early repayment charges
Typically, a lender might charge an ERC (in this example) of: 5% of the mortgage amount in year one, 4% in year two; 3% in year three, 2% in year four and 1% in year five. Or they may charge, say the equivalent of three months interest.
Early Repayment Charges can add up to thousands of pounds. Make sure you are aware of any ERCs payable, before you sign up for a mortgage deal.
