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Early Repayment Charge (ERC)
- When a loan or mortgage is repaid, or partly repaid, earlier than expected (before the end of any fixed, discounted, or capped rate period), many lenders charge a fee to cover the overall cost of the customer not keeping the loan for the agreed period. This particularly applies to certain types of mortgages, such as those with Fixed , Discounted or capped interest rates and to Cashback mortgages.
The early repayment charge was sometimes referred to as a redemption fee or Redemption penalty in the past. |
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