Which lenders offer mortgages without early repayment charges?
A range of banks and building societies offer flexible mortgages to borrowers without early repayment charges.
Most lenders offering mortgages without early repayment charges issue them as either Bank of England tracker rates or discounted variable deals. The vast majority of borrowers opt for two-, three- and five-year fixes, but these rates nearly always have fees to repay the mortgage early.
Mortgages without exit fees tend to be popular with people unsure about their immediate plans. They may not want to lock into a product that will be expensive to get out of for a range of reasons. Maybe they are not getting on with their partner, or they want to move up the property ladder, carry out major renovation work, sell their home, or make lump sum overpayments.
Which lenders offer mortgages with no early repayment charges?
HSBC for Intermediaries, Barclays, TSB, Skipton Building Society and Nationwide for Intermediaries are some of the biggest lenders offering mortgages without early repayment charges.
Is it worth paying a standard variable rate for the flexibility?
Once a fixed or tracker mortgage rate ends, it usually reverts to the lender's standard variable rate. These reversion rates do not typically have charges for repaying the mortgage, but the rates are generally high. For example, Halifax’s current standard variable rate is 8.74%, and Nationwide Building Society’s is 7.99%.
If you are unsure whether you should be taking a fixed deal and plan to take your lender's standard variable rate, then it is worth noting there are competitively priced flexible mortgages available. It may make sense to remortgage away from your existing lender if it does not offer variable rates or low early repayment fee options.
What is the benefit of taking a mortgage with no early repayment charges?
Mortgages without tie-ins give borrowers flexibility. They allow homeowners to sell their property, refinance to raise funds for home improvements or switch to more suitable products when they are available. It also always people to make lump overpayments without being capped at the standard 10% limit.
Aaron Strutt, product director at Trinity Financial, says: "Many borrowers tend to opt for the cheapest mortgage without considering all of their options or talking through their decisions with their partner or family. They also do not thoroughly research the market to ensure they get the most suitable deal.
"Flexible mortgages are not suitable for everyone, but they are an option more borrowers should consider. Some lenders offer switch-to-fix facilities where it is possible to take a tracker rate and then lock into a fixed deal, which provides more flexibility with the option of payment security."
How much is a typical early repayment charge?
Charges vary from lender to lender. It tends to be the tracker rate mortgages which do not have exit fees.
Barclay recently lowered the percentage it charges borrowers when they repay their mortgages early. This is something that does happen very often.
Nationwide charges 5% of the loan amount for the first two years on its five-year fixes and 7% of the loan amount of its ten-year fixes, although they reduce every year. In comparison, Barclays charges 2% of the loan amount on its five-year fixes and flat 5% exit fees on its ten-year fixes.
Do lenders offer existing borrowers trackers without early repayment charge products?
Many banks and building societies do not offer existing customer mortgages without early repayment charges apart from the standard variable rate.
Lenders tend to have different rates for new customers buying a home or remortgaging or existing customers coming to the end of their deal.
Just because a lender is not offering its customer a tracker or flexible mortgage without tie-ins does not mean they aren't available through other banks or building societies.
Are there flexible or offset mortgages?
Accord Mortgages, Barclays, Clydesdale, Coventry for Intermediaries, Coutts and Handelsbanken are some of the biggest players in the flexible and offset mortgage market.
Offset mortgages allow borrowers to make lump sum overpayments and take the funds out again. This means the amount of interest they pay is reduced.
Some offset mortgage lenders allow customers to repay 99% of the mortgage without charge.
Call Trinity Financial on 020 7016 0790 to secure a mortgage, book a consultation, or complete our mortgage questionnaire.
The information contained within was correct at the time of publication but is subject to change.
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