Halifax to offer mortgages without early repayment charges
Halifax bank, one of the UK’s biggest and most well known mortgage lenders will be releasing some new mortgage products over the next few days, most significantly perhaps, they will be releasing mortgages without early repayment charges. Not only does this mean that borrowers will potentially be free to change or alter their mortgages without the fear of incurring early repayment charges, but a general change to the way that lenders are thinking about mortgage lending is very progressive in a tough mortgage market. In this blog, I will run through what early repayment charges on mortgages are, why you want to try and avoid them, and what Halifax will now be offering.
Halifax Mortgages Without Early Repayment Charges
As of today (Monday the 14th of October 2024) Halifax will introduce new Early Repayment Charge (ERC) free tracker mortgage products. A tracker mortgage product does not have a fixed mortgage interest rate and tracks the bank of England base rate. This means that your rate could go up or down depending on whatever the bank of England base rate does. Meaning that if the base rate increases, you may want to have the ability to move to another lender or rate fairly easily. Likewise, if the base rate comes down, you may want to switch to a different type of product or a different lender with a competitive fixed product. Having products like this offering mortgages without early repayment charges, borrowers can have the flexibility to chop and change their loan to make the most financial sense for them, without being charged to do so.
What Are Early Repayment Charges For Mortgages?
Many mortgage products in the UK come with something called an Early Repayment Charge or an ERC. This is simply a charge that the mortgage lender will put on the product that they offer, that is designed to ensure that their money lending makes financial sense for them. They will often fix you in to a product for 2 or 5 years and during that time they will make money on the interest they charge on the loan. They impose an ERC in case you decide to break your mortgage contract early, so that they don’t lose out the money they would have made over the life of the fixed term mortgage.
What Percentage Are Early Repayment Charges On Mortgages?
Normally an ERC is calculated as a percentage of the outstanding balance of the loan. Each mortgage with an early repayment charge is different and depends on what the lender wants to charge, but it is usually between 1 and 5%. So, for example, if you were charged an ERC on a loan of £200,000 you could potentially pay up to £10,000 but potentially as low as £2,000.
Speak To An Advisor About Mortgages Without Early Repayment Charges
Halifax entering the market with more ERC free mortgage products is great, but there are thousands of mortgage products out there and hundreds of mortgage lenders. If you are looking for a new mortgage, then please feel free to give our team a call or send us a message to see what kind of deal we can find for you. We are here to help.
