Question 1

What is an early repayment charge (ERC)?

Accepted Answer

An early repayment charge is a fee your mortgage lender charges if you pay off your mortgage (or a large portion of it) before the end of your fixed-rate or discounted-rate period. ERCs are typically calculated as a percentage of the outstanding mortgage balance, usually between 1% and 5%. They are designed to compensate the lender for the interest they will miss out on.

Question 2

How much are typical early repayment charges?

Accepted Answer

Early repayment charges typically range from 1% to 5% of the outstanding mortgage balance, often decreasing each year of the deal. For example, a 5-year fixed rate might charge 5% in year 1, 4% in year 2, 3% in year 3, 2% in year 4, and 1% in year 5. On a £200,000 mortgage, a 3% ERC would cost £6,000. Some lenders charge a fixed number of months' interest instead.

Question 3

Can I overpay my mortgage without paying an ERC?

Accepted Answer

Most mortgage lenders allow you to overpay up to 10% of your outstanding balance each year without incurring early repayment charges. Some lenders offer higher allowances of 15% or 20%. Any overpayment above your annual allowance will typically trigger the ERC on the excess amount only. Check your mortgage terms for your specific allowance — it resets each year on the anniversary of your mortgage.

Question 4

When should I consider paying an early repayment charge?

Accepted Answer

Paying an ERC can be worthwhile if the savings from switching to a lower interest rate outweigh the charge. Compare the total cost of your current deal (including the ERC) with the new deal over the same period. Other common reasons include selling your property, major life changes, or if you have come into a large sum and want to clear the mortgage. Our calculator helps you compare these scenarios.

Question 5

Do all mortgages have early repayment charges?

Accepted Answer

No. Standard variable rate (SVR) mortgages and tracker mortgages that have passed their initial deal period typically do not have ERCs. Only mortgages within their initial fixed-rate or discounted-rate period usually carry ERCs. Some lenders also offer specific ERC-free mortgage products, though these may come with slightly higher interest rates as a trade-off.

Question 6

Can I port my mortgage to avoid an ERC?

Accepted Answer

Yes, many mortgage products are portable, meaning you can transfer your existing mortgage deal to a new property without paying an ERC. However, porting is subject to the lender's approval and a new affordability assessment. If the new property costs more, you may need additional borrowing at a different rate. If it costs less, you may need to repay part of the mortgage, which could trigger a partial ERC.

Fixed Rate Periods	Usually entire fixed period
Tracker Mortgages	Often first 1-3 years
Discounted Rates	During discount period
Cash-back Deals	Until cash-back repaid
Standard Variable Rate	Usually no ERC

Early Repayment Charge Calculator

Early Repayment Charge

£0

ERC as % of Balance

Months Until ERC Expires

ERC Breakdown

Outstanding Balance

ERC Rate

Total ERC

Should You Pay the ERC?

Monthly Savings with New Rate

Break-Even Point

When ERCs Apply

ERC-Free Allowances

Understanding Early Repayment Charges

Common ERC Types

When to Consider Paying ERC