EARLY REPAYMENT CHARGE

For certain mortgages there is a charge if you pay your mortgage off in full or part within a specified period. Usually this charge is during the period of any special deal such as the time that the rate is fixed or discounted for. There are some lenders who will carry it on for longer than the mortgage deal therefore committing you to their variable rate once the deal is finished.

At first glance these rate look extremely attractive because they usually offer a very attractive low rate however the lender is keeping you locked in to them for longer so either you will have to go back to the base rate with them until the penalty time has finished or you will be charged a penalty to leave. These penalties are not cheap and can be as much as 6 months interest or more.

Our advice will normally be to avoid any rate where the repayment charge runs beyond the end date of the rate. This then gives you the freedom to shop around for another competitive deal with our help of course. Sometimes there is no alternative than to have a penalty run on for longer but we will try to avoid it.

Some mortgage rates have no penalty at all and these are good if you are looking to make extra payments or are likely to repay the loan short term. Other rates may have repayment charges but still allow you to pay up to 10% of the loan per year penalty free.