Early repayment charges

[Letsgotocornwall]

We are about to get a mortgage and we've calculated we could afford to overpay by quite a lot each month. The mortgage we're looking at is fixed rate and has ERCs of 5% in year 1, 3% in year 2, etc.
How does this work out? Is it 5% of the overpayments?

isnt that if you pay it all off, or is that the overpayment charge you are quoting?

My understanding is that paying it all off is an early redemption charge? It says that an early repayment charge exists and is as above.

ok then, yes if you pay off your whole mortgage early (usually this means within the fixed rate period not literally the whole mortgage term) then the charge is the percent of the amount you borrowed eg borrow 100000, pay all back in first year, charge is 5000. (5%)

early repayment can mean the same, or it can also mean if you overpay by more than you are permitted. charge is the same afaik

So, if we pay an extra 5k a year, we'd have to pay an additional 5% of the 5k? Or is it just if you pay it off completely? Sorry if I'm not being clear.

Generally on a fixed rate deal there is an amount per year you can pay off before you incur repayment charges. You need to find out what that is. Alternatively you could shorten the term of the mortgage so the repayment amount was what you actually intend to pay.

You can normally pay 10% prepayment per annually without penalty, but your contract will state applicable terms for you.

Often the ERC goes beyond the fixed rate period so look out for that.

I've previously had a 2 year fix with a 5 year ERC in the contract.

Thank you.

Usually Early Repayment Charges apply if you pay off in excess of a certain amount. When they kick in will vary, it could be 10% over payments allowed, £500 per month, or the whole mortgage as long as you leave £1 on the balance, some won't permit any over payments.

All are possible but it will say somewhere on your KFI or Mortgage Offer how it works. Over hangs (when you still have an ERC but the fixed rate has ended) are relatively rare now but again, the KFI / Mortgage Offer will make that clear (I used to be an Independent Mortgage Adviser / Broker).

Some mortgages allow you to overpay to a certain % of the outstanding balance each year without penalty.