Mortgage early repayment charges explained
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Quick answer: Early repayment charges apply if you leave a fixed or discounted mortgage before the deal ends — often 1–5% of the outstanding balance, making remortgaging costly.
ERCs protect lenders when you exit cheap deals early. Timing remortgages to deal end or using porting can avoid them. This guide explains calculation and negotiation.
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Read the full mortgages & first homes guide →Primary source: www.gov.uk/buying-a-home/preparing-to-buy
Calculating cost
On a £250,000 balance with 3% ERC, exiting costs £7,500 plus admin — compare against remortgage savings over remaining deal term. A lower rate must save more than the ERC over the remaining fixed period.
Some lenders use a tie-in period shorter than the rate fix — read your key facts illustration carefully. ERCs may apply for longer than the initial fixed rate if you choose a product with extended tie-in.
Avoiding ERCs
Remortgage in the final months when ERC drops to zero or a lower tier. Many ERC schedules reduce in steps over the fixed period rather than disappearing all at once.
Port to a new property if your product allows and the maths works versus new market rates. Porting preserves a cheap rate when moving home without paying ERCs.
When paying ERC makes sense
If the new rate saves more over remaining years than ERC plus fees, paying to switch early can still win — run the numbers. Include arrangement fees and legal costs in your comparison.
Debt consolidation or divorce sales may force ERC payment — budget ERC in completion statements. Your solicitor should flag ERC costs before you commit to redeeming early.
Common questions
Do ERCs apply on death?
Many lenders waive ERCs on death — check policy; survivors may need to remortgage or sell.
Are tracker mortgages ERC-free?
Some lifetime trackers have no ERC; short-term discounted trackers often do — product specific.
Can I negotiate ERC waiver?
Retention deals when staying with same lender sometimes waive ERCs — ask when rates fall sharply.