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Trying to google for the scenario but not getting anything. I'm sure it is just a case of them saying, "nah, ERC on the full balance" but I'm wondering why nobody else seems to have thought of this. Am I peculiar? Does it make sense to anyone else?
stevo_com-
I'm with YBS, just been through our paperwork and our ERC is calculated on the remaining balance on the account and not the start of the year balance.
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It makes sense to me. I'd make the maximum overpayment possible, wait a day for that to go through, and then ask the mortgage company how much to pay off the rest.
They could only charge ERC on an amount other than the outstanding balance if the T&Cs said they could. There could, theoretically, be a clause in there to say "ERC is due on the outstanding balance and any overpayments made within 12 months of the early repayment." but I really doubt they'd have that anywhere.
Looking at my most recent mortgage statement (Santander) I can see that the "cost to pay off the mortgage now" figure takes into account the remaining overpayment allowance rather than a blanket application of the ERC across the whole outstanding sum.
Other mortgage providers may differ.
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I assume the issue is potentially that you would have to make the payment in two tranches (one overpayment and one early redemption with the overpayment possibly being at an earlier date to differentiate it) and a lot of people don't have the spare cash to make a 10% overpayment at an earlier date, particularly if they're also paying a deposit on a property they are buying.
Tango130
Greenbank
aggi
I've just redeemed my mortgage with Halifax, they charged me the early repayment amount on the full balance. (It didn't occur to me about there potentially being a permitted element of 10% even though I was permitted to overpay by that amount.)