Tricky things, ERCs …
… there’s great uncertainty surrounding early repayment charges.
Every lender has a different way of charging early repayments. Some are a fixed % of amount – some are based on the long term interest rates
So, it’s vital your client understands that should they want to change their product or sell at some stage in the future, they could incur huge costs – up to 25% of the original loan in some cases
One thing’s for certain - there‘s a wide range of circumstances where these charges could bite – and, where they do bite, they can be substantial
It pays to be fully aware of your client’s short to longer term requirements.