Early repayment charges
An early repayment charge (ERC) is a penalty for repaying some or all of your mortgage during a tie-in period — usually a fixed or discounted deal. Knowing how yours works lets you pay down debt or switch deals without an avoidable bill.
What an ERC is
An ERC is a fee charged if you repay more than your allowance, or clear the mortgage entirely, during the product’s tie-in period. It’s typically a percentage of the balance repaid — often stepping down each year of a fixed deal, for example 5% in year one falling to 1% by the final year.
Once the tie-in ends — and on most SVR and many tracker products — there’s usually no ERC at all.
Why contractors should care
Contracting income can arrive in lumps — a lucrative contract may leave you wanting to clear a chunk of the mortgage quickly. Understanding your ERC and overpayment allowance means you can do that efficiently rather than triggering a penalty.
- Most lenders allow penalty-free overpayments of up to 10% of the balance a year.
- ERCs usually reduce each year through a fixed term.
- Porting your mortgage to a new property can avoid an ERC when you move.
Planning around them
If you expect to repay early — through a windfall, a move, or a remortgage — factor the ERC into the maths, or choose a product with no tie-in. A broker weighs the rate against the flexibility for your situation.
Early repayment charges, answered
How much is a typical early repayment charge?+
Often between 1% and 5% of the amount repaid, usually decreasing through the fixed term. The exact figure is set out in your mortgage offer — always check before overpaying beyond your allowance.
Can I avoid an ERC?+
Yes — stay within your annual overpayment allowance (commonly 10%), wait until the tie-in ends, port your mortgage when moving, or choose a product with no early repayment charge.
Does remortgaging trigger an ERC?+
If you remortgage during a fixed or discounted tie-in, an ERC usually applies. Timing a remortgage to complete as the tie-in ends avoids it — which is why we plan it a few months ahead.