Early repayment charges (ERC) explained

An early repayment charge (ERC) is a fee you may pay if you leave your mortgage deal early. If you’re remortgaging during a fixed or discounted period, ERC is often the number that decides whether switching is worth it.

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Quick answer

ERC is usually a percentage of your outstanding balance, charged if you redeem (pay off) the mortgage before the deal end date. To estimate it, check your offer document for the ERC percentage and apply it to your current balance. Then compare that cost against your expected monthly savings using the break-even calculator.

What ERC actually means

Think of ERC as the “exit fee” for your current deal. Most lenders price mortgage deals assuming you’ll stay for the agreed period. If you leave early, the lender may charge an ERC to cover its costs.

ERC is most common on fixed-rate deals and can also apply to trackers, discounts, or special products with promotional pricing. Not every mortgage has an ERC, and not every time period triggers it, so it’s always a “check the paperwork” item.

How ERCs are calculated (and what affects the cost)

The typical pattern is a percentage that reduces each year of the deal. For example, a five-year fix might have a sliding scale. The charge is often based on your outstanding balance at the time you redeem.

Common things that change ERC
  • Balance: higher balance means a larger ERC at the same percentage.
  • Where you are in the deal: some ERCs reduce each year.
  • Deal type: fixes often have ERCs; standard variable rates may not.
  • Overpayment allowances: some deals allow partial overpayments without ERC (up to a limit).
  • Porting rules: moving home and porting can sometimes avoid ERC, but conditions apply.

Tip: if your lender quotes ERC as a percentage, your rough estimate is: balance × ERC%. Always confirm with the lender for an exact redemption statement.

Pitfalls to avoid

ERC checklist

  • Find the ERC wording in your mortgage offer or tariff.
  • Confirm the deal end date and whether the ERC reduces by year or month.
  • Get (or estimate) your current outstanding balance.
  • Ask your lender for a redemption statement if you’re close to switching.
  • Use the break-even calculator to compare ERC + fees against savings.
  • If moving home, ask about porting and what conditions apply.

FAQs

An ERC is a fee some lenders charge if you leave a mortgage deal early (for example, switching during a fixed-rate period). It is designed to cover the lender’s cost of you exiting the deal before the agreed end date.

Often as a percentage of the outstanding balance, sometimes changing by year of the deal (for example 5% in year one, 4% in year two). The exact method is in your mortgage offer and tariff.

They can. If you redeem the mortgage, an ERC may apply. Some lenders allow “porting” the mortgage to a new property, which can avoid an ERC if you meet conditions.

Sometimes. If you remortgage when your deal ends (or inside a lender’s fee-free window), an ERC may not apply. Timing is often the simplest way to reduce ERC costs.

Yes. ERC can be the biggest switching cost. Include it in your break-even calculation so you don’t overestimate savings.