What does Higher Early Repayment Charge mean?

A Higher Early Repayment Charge is a much higher than a usual ‘early redemption fee’ you will have to pay in case you decide to pay off your mortgage earlier. This sort of higher charge is particularly pertaining to fixed or discounted rate mortgages.

For example, for a mortgage loan on a five year period with fixed rates, if you pay off your mortgage within the first year, you will pay a 5% early repayment charge. This simply means that if your loan was for £500,000, then you would have to pay £25,000 early redemption fees.

Certainly as the term of your loan advances in time so does the early repayment charge get lower? Lenders usually charge these early repayment fees for the very fact they offer good terms for your loan, so they don’t want o risk you backing out by switching to another mortgage.