Research from moneysupermarket.com reveals early repayment charges can exceed £10,000 for borrowers who want to exit a longer-term mortgage deal.
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For example, a homeowner with a £150,000 mortgage on a 10-year fix with Yorkshire Building Society at 5.69 per cent would shell out £10,324 if they needed to redeem after two years. Typical cases of early redemption occur with relationship splits or a move to a smaller house or to a house in another part of the country or overseas.
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Louise Cuming, head of mortgages at price comparison site moneysupermarket.com, said: Longer-term mortgages are very much ‘in vogue’ at the moment, but their ERCs potentially have quite a sting in their tail. The trouble with committing to a longer-term mortgage is people never know how their circumstances may change. If they have to exit quickly they may get a painful payment shock.
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