This is a penalty charged on traditional (i.e. non-Flexible) mortgages when the loan is repaid in full within a set period.
Usually it applies on a pro rata basis when capital repayments are made outside of the agreed monthly payments.
Many Early Repayment Charge periods are linked to those of offers, such as Capped, Discounted or Fixed rate periods. However, some mortgage rate have extended Early Repayment Charges which tie-in borrowers even while they are paying the Lender’s SVR.
Also known as: Early Redemption Penalty (ERP); Redemption Penalty.Go back