An early repayment charge (ERC) is a fee your lender charges if you repay more than allowed during a fixed, tracker or discount deal. That could be by overpaying above the limit, remortgaging early or selling without porting. ERCs compensate the lender for the interest they expected to earn.
How much are ERCs?
ERCs are a percentage of the amount repaid early, and usually step down over the deal. A typical 5-year fix might charge:
| Year of deal | Typical ERC |
|---|---|
| Year 1 | 5% |
| Year 2 | 4% |
| Year 3 | 3% |
| Year 4 | 2% |
| Year 5 | 1% |
2-year fixes often charge 2–3% in year 1 and 1–2% in year 2. Some trackers and lifetime deals have no ERCs at all. Your mortgage offer and KFI/ESIS document set out the exact charges.
On a £200,000 balance, a 3% ERC is £6,000, so it’s worth knowing exactly where you stand.
The overpayment allowance
Most lenders let you overpay up to 10% of the balance each year without an ERC. Details vary:
- the 10% may be based on the balance at the start of the year or at the start of the deal;
- the “year” may be the calendar year, the anniversary of the deal, or the lender’s year;
- some lenders allow less, and some allow unlimited overpayments.
Our overpayment calculator checks your plan against an allowance you set (10% by default) and flags the first month you’d exceed it.
Avoiding ERCs when you move
If you sell during a fixed deal, you can often port the mortgage to your new home: you keep your rate and avoid the ERC. You’ll need to pass affordability checks again, and any extra borrowing will be at a new rate. If the new home completes after the old one sells, ask your lender about a refund window. Some refund the ERC if you take a new mortgage with them within a set time.
When paying an ERC can be worth it
Occasionally it makes sense to pay an ERC to switch, for example when rates have fallen sharply, or when you’re on a high fixed rate with a long time left. To decide, compare:
- staying: remaining payments on your current rate until the deal ends, versus
- switching: the ERC + new fees + payments at the new rate over the same period.
The remortgage calculator does exactly this. Enter your ERC under Early repayment charge and compare by true cost.
Timing a remortgage to avoid ERCs
Most lenders let you secure a new deal up to six months before your current one ends, to start on the day it finishes. You avoid both the ERC and time on the SVR.
For deciding whether to overpay at all, see overpay your mortgage or save?.
ERCs on product transfers
Switching to a new deal with your current lender before the old one ends can still trigger an ERC, though some lenders waive it in the final months. Ask before you commit.
Common questions
Do I pay an ERC if I sell my house?
Only if you repay the mortgage during the deal and can’t port it. Porting to your new home usually avoids the charge.
Is the 10% overpayment allowance per year?
Usually per year of the deal or per calendar year, depending on the lender. Unused allowance doesn’t roll over.
Can I avoid an ERC by remortgaging early?
Lock in a new deal up to six months ahead to start when your current deal ends. Compare options with the remortgage calculator.
Are ERCs negotiable?
Rarely, but some lenders waive them in the last months of a deal or for product transfers. Always ask.
This guide is general information, not financial or tax advice.