The i - Why I’m paying £17,000 to get out of my fixed mortgage
At the time, he decided the best option was to accept it. But now he is thinking about breaking the deal – even though it would cost him £17,000 to do so.
Is it worth paying an exit charge to leave your fixed mortgage?
If you’re locked into a mortgage deal and believe there could be better options out there, then taking an early repayment charge (ERC) can be one option.
Whether it’s a good choice depends on your exact circumstances.
Aaron Strutt of brokers Trinity Financial said: “There are a lot of people in Alex’s situation. The timing of his remortgage was very unfortunate. Rates have clearly come down, but borrowers are worried about remortgaging because of high exit fees.
“If you are taking a five-year fix, it is well worth choosing a lender that offers lower early repayment charges on its longer-term fixes. Some lenders have much higher exit fees than others.
“Rates are still likely to come down so it may well be worth Alex holding off to see what happens to rates before paying the £17,000 early repayment charge. If he wanted to secure a remortgage deal, he could apply for one now and then hold off taking it until he can bring himself to pay the exit fees. Many economists predict base rate will come down at least twice this year, which should lead to cheaper mortgages.”