Santander has announced a positive change for mortgage customers looking to move home, extending the period in which they can avoid Early Repayment Charges (ERCs) when switching to a new deal. From Monday the 3rd of February 2025, Santander will waive ERCs for existing home movers with nine months or less remaining on their current mortgage deal—an increase from the previous six-month threshold. In this article I will run through what an early repayment charge, the Santander early repayment charge waiver, and why this change is something to be celebrated!
What is an Early Repayment Charge (ERC)?
An Early Repayment Charge (ERC) is a fee that mortgage lenders charge when a borrower repays their mortgage early or switches to a new deal before the agreed term ends. ERCs are typically calculated as a percentage of the outstanding mortgage balance and can cost borrowers thousands of pounds, depending on their mortgage size and lender terms. The intended effect being that borrowers are more likely to stay in their current deal with their current lender for longer, rather than taking out short term borrowing that doesn’t benefit the lender at all financially. Santander early repayment charge rules are pretty conventional for the most part, however these new changes on the ERC waiver period really have become a game changer for home movers.
What Does This Change To the Santander Early Repayment Charge Mean for Mortgage Customers?
This update from Santander gives mortgage customers greater flexibility when planning their next move. Previously, borrowers with six months or less remaining on their current fixed-rate mortgage could switch to a new deal without incurring an ERC. Now, Santander is extending that period to nine months, which means:
- More time to secure a competitive mortgage rate: With mortgage rates fluctuating, borrowers can lock in a new deal sooner, protecting themselves from potential interest rate rises.
- Greater financial flexibility for home movers: Homeowners looking to move won’t need to wait until the last six months of their deal to avoid an ERC, reducing financial pressure and enabling smoother transactions.
- Full ERC waiver for those borrowing the same or more: If borrowers take out a new mortgage for the same amount or more, they will have their ERC waived in full.
- Partial ERC waiver for those borrowing less: If a customer borrows less than their existing mortgage balance, they will still benefit from a waiver, but only on the amount covered by the new deal.
Why This Matters
For homeowners planning to move, this policy change could save them thousands in ERCs, making it easier to transition to a new property. It also means borrowers can act sooner to secure a better mortgage deal, rather than waiting until the last six months of their term. If you’re considering a move and want to know how this change could impact you, speak to an independent mortgage advisor like ourselves at Oportfolio Mortgages to explore your options.
