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When Early Repayment Charges are applied

An ERC is only applied if, during the fixed interest rate period:

• Your client makes a repayment in any annual period following the completion date, which is more than 10% of the outstanding loan balance (as calculated on each anniversary of completion).
• Your client switches to another mortgage provider.
• Your client downsizes and makes a partial/full redemption of the loan.

An ERC is NOT applied if:

• Your client redeems the mortgage in the fixed interest rate period due to death of a partner or move into long term care.
• If the property is sold following death or move into long term care of the surviving partner.
• If your client redeems all, or part of the loan, after the fixed interest rate period.
• If, during the fixed interest rate period, your client repays up to 10% in any year under the annual repayment allowance.

Annual Repayment Allowance

In any year during the fixed interest rate period, your client may repay up to 10% of the outstanding loan balance at the beginning of such year, without incurring a penalty.

For this purpose a year is calculated from the commencement of each anniversary of the date of the mortgage advance.

If your client finds themselves in financial difficulty due to an unexpected change in circumstances, they may be entitled upon request to a payment break for up to 6 months, to allow them a little breathing space.

At the end of the payment break, the missed payments can either be paid as a lump sum payment, or they can be added to the loan. If added to the loan, this will mean that their regular monthly payment will increase.