Mortgage Advice

Early Repayment Charges on Mortgages

Unfortunately, many people take out mortgage with hefty early repayment charges. If this is the case there is little that you can do about it. With the high penalties, it is usually best just to see the agreement out. For example,  a standard Woolwich mortgage charges  6 months interest at the prevailing standard variable rate; this could easily be several thousand pounds. Rather than paying off a mortgage early and facing the penalty, use the money to invest in an alternative saving scheme. (see best saving rates here)

However, you may have a cause for complaint, if your bank has increased the early repayment penalty without adequate notice. Recently the FSA found that many banks were guilty of increasing early repayment charges by more than was reasonable. In this case it is worth writing a letter of complaint and trying to get a refund for the difference. With many banks already having paid out, you have a good chance of getting your money back.

Avoiding Early Repayment Charges on Mortgages

Because early repayment charges on mortgages can be so high it is best to choose a flexible mortgage which gives the option for making extra payments without any charge. If there is any chance you might be able to pay off your mortgage early, read carefully any details of repayment charges.