Fixed early repayment charges (ERCs)

A lifetime mortgage is a long term commitment and is not intended to be repaid early.

If your client decides to repay the money early, OneFamily will incur costs and these may be passed on to your client in the form of an early repayment charge.

We recognise that your client is looking for certainty and peace of mind when they take out a lifetime mortgage and, with this in mind, we have designed our ERCs to be fixed, simple and easy to understand.

Repaying early

The loan may be repaid in full at any time.

Partial repayments may also be made, providing there is a minimum loan balance of £10,000 remaining. ERCs will not be payable where:

  • Your client sells the property and transfers the lifetime mortgage to another property which we deem to be suitable security for the mortgage advance. A part redemption of the loan may be required if the value of the new property is less than the original.
  • Your client (or the last surviving client) dies or moves into long term care.
  • The ten year early repayment term of the mortgage has expired.
  • N.B ERCs are not payable on the Lump Sum Voluntary Payment Lifetime Mortgage where the amount repaid is within the 10% annual repayment allowance.
  • If your client sells the property and moves to another property after five years - ERC free downsizing protection.

How the fixed ERC works

In years one to five of the loan, a 6% ERC would be charged on the initial balance plus the completion fee if it was added to the loan.

In years six to ten, a 3% ERC would be charged on the same basis.

Our current redemption fee would also be added to the amount due.

For partial repayments the amount will be calculated on the balance being repaid plus our partial redemption fee.

The ERC will never be greater than 6% of the total of the initial lump sum and the completion fee, plus the redemption fee.

The same rules will apply to a further advance with the start date taken as the day the funds are released.

Fixed early repayment charges

 Loan amount  Completion fee  Balance  Charge year 1-5*  Charge year 6-10
 £30,000  £950 (added to loan)  £30,950  £2042  £1120
 £30,000  £950 (paid on completion)  £30,000  £2000  £1100
* 6% + redemption fee (£200)
3% + redemption fee (£200)

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