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Most products, whether discounted, tracker, capped or fixed, are for a
particular period of time which may be date specific at the point of
application or a number of years from the date the mortgage begins.
Typically, the lower the interest rate the shorter the product period.
An ERC will normally apply if the borrower were to redeem their
mortgage during a particular product period although this will usually
disappear when that period comes to an end. The borrower is therefore
free to consider other options, either from their existing lender or an
alternative one by way of a re-mortgage, rather than reverting to the
SVR. However, care must be taken when looking at some of the very low
initial rates available as these may include an extended tie-in where
an ERC will still apply even when the borrower has reverted to a higher
rate of interest. This may make it expensive to consider other
alternatives when faced with an increase in monthly payments.
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