Fix now and pay an Early Repayment Charge?

Posted on 21 January 2011 by Tim Randolph

I currently have a £38k mortgage, currently with Santander at 6.7% (spread against two loans).

The early repayment charges are c£1k until Sept '11 - should I hold out until the fixed term of this mortgage ends and remortgage hoping rates remain low, or accept the charges and move to a cheaper deal while rates are low?


We are expecting Fixed rates to rise before the Bank of England Base Rate starts going up and we have started to see some evidence of this. However, they are still at a very low level when compared to historical rates and it is unlikely they will rise sufficiently to make it worth paying an Early Repayment Charge of over 2%. Without knowing the value of your property I suspect that you will qualify for some of the lowest rates available when you do start to look.

Like other Lenders, Santander allow you to book a product ahead of the maturity of your current deal and so you will not have to wait until September to take action. Fixed rates can be booked upto 4 months ahead and variable rates up to 5 months.

I recommend that you speak to an independent mortgage adviser now about your situation and once in possession of your full details they will be a better position to advise you. I suspect that you will not need to check the rates available until March or April, but the sooner you have a proper review the better.


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