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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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