Mortgage Early Repayment Charge Calculator UK
Work out the early repayment charge for leaving your fixed deal before it ends — then see whether remortgaging or repaying early still leaves you in front once the penalty is paid.
An early repayment charge (ERC) is the penalty your lender applies if you repay all or part of a fixed, tracker, or discount mortgage before the deal period ends. It’s almost always a percentage of the balance you still owe — typically 1% to 5% — and that percentage usually falls each year you stay. On a £250,000 balance, a 3% charge is £7,500, paid on top of whatever you owe. But the charge itself is only half the question. The half that decides whether you should leave is the break-even: does a cheaper deal recover the penalty before your current one would have ended anyway? This calculator works out both — the charge for your balance and band, and whether breaking the deal early genuinely saves money. To model the new deal itself, use the Remortgage Calculator, or the Overpayment Calculator to chip away ERC-free instead.
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Early repayment charge — quick lookup
The left table shows the charge for a given balance and ERC band — find your row and column for a fast estimate before running your exact figures above. The right table shows the other half of the decision: how many months a new, cheaper deal takes to recover a £6,000 charge, depending on how much cheaper the new rate is. Both use typical UK assumptions; the calculator runs your numbers.
| Balance | 1% | 2% | 3% | 5% |
|---|---|---|---|---|
| £100k | £1,000 | £2,000 | £3,000 | £5,000 |
| £150k | £1,500 | £3,000 | £4,500 | £7,500 |
| £200k | £2,000 | £4,000 | £6,000 | £10,000 |
| £300k | £3,000 | £6,000 | £9,000 | £15,000 |
| £400k | £4,000 | £8,000 | £12,000 | £20,000 |
| New rate is… | Saving/yr | Break-even |
|---|---|---|
| 0.5% lower | £1,000 | 72 mths |
| 0.75% lower | £1,500 | 48 mths |
| 1.0% lower | £2,000 | 36 mths |
| 1.5% lower | £3,000 | 24 mths |
| 2.0% lower | £4,000 | 18 mths |
Right table assumes a £200,000 balance and a £6,000 ERC (3%). The saving is the lower rate applied to the balance for a year; break-even is the charge divided by that saving. The smaller the rate gap, the longer the penalty takes to earn back — and if your deal ends before break-even, waiting wins.
How the early repayment charge is calculated
When you take a fixed-rate mortgage, the lender is making a bet. They fund your loan at a cost they’ve fixed too, and they price the deal expecting you to stay the full term — two years, five, sometimes ten. The early repayment charge protects that bet: if you walk away early, the ERC covers the income they lose. The Financial Conduct Authority requires lenders to set the exact charge out in your mortgage offer and your annual statement, so it’s never a surprise figure. The catch is that almost nobody reads the page it sits on until they want to leave.
The formula behind almost every UK ERC is short:
Two things make the real number move. First, the charge is on the amount you still owe, not the amount you originally borrowed — pay down the balance for a few years and the same percentage produces a smaller bill. Second, most lenders use a tapered structure: the percentage drops each year you remain in the deal, rewarding you for staying. A common five-year fix charges 5% in year one and steps down to 1% in the final year. A two-year fix often runs at a flat 2%, or 2% then 1%.
The five-year taper in practice
Because the band falls each year, the same £250,000 balance can carry a £12,500 charge early on and a £2,500 charge near the end. The table below shows the typical step-down — always check your own offer for the exact bands, as lenders vary.
| Year of deal | ERC band | Charge |
|---|---|---|
| Year 1 | 5% | £12,500 |
| Year 2 | 4% | £10,000 |
| Year 3 | 3% | £7,500 |
| Year 4 | 2% | £5,000 |
| Year 5 | 1% | £2,500 |
A small number of older or specialist deals use an interest-based ERC instead — the charge equals a set number of months’ interest on the balance. These are rarer now, but if your offer says “months’ interest” rather than a flat percentage, the break-even logic below still applies; you just swap the percentage for the interest figure your lender quotes.
Worked examples
Four scenarios that show how the charge — and whether it’s worth paying — changes with balance, the year you’re in, and the time you have left.
Scenario 1 · Remortgaging mid-deal
Big balance, early in a five-year fix
Early repayment charge: £9,600
£9,600 is a serious sum. It only makes sense to pay if a new deal saves more than that over the three years you’d have left — and at a 1% lower rate on £240,000, that’s £2,400 a year, taking four years to break even. With only three years left, you’d be switching to a worse position. Early in a five-year fix, the maths usually says stay.
Scenario 2 · Near the end of the deal
Smaller balance, one year to run
Early repayment charge: £3,700
The charge has tapered down to £3,700, which feels affordable — but with one year left, you’d need a new deal to save that much in twelve months to come out level. That takes a rate roughly 2% lower, which is rare. Most of the time, waiting out the final year and switching penalty-free beats paying £3,700 now.
Scenario 3 · Large balance, year one
When the charge alone rules it out
Early repayment charge: £21,000
At £21,000, breaking the deal this early is rarely worth it. The bigger your balance, the higher the bar a new deal has to clear — you’d need to save £21,000 in interest before your current deal would have ended anyway. Only an exceptional rate drop justifies a charge this size. The honest answer here is usually to wait for the band to taper down.
Scenario 4 · Overpaying above the allowance
Only the excess is charged
Excess over allowance: £10,000 · ERC on excess at 3%: £300
This is the example that surprises people. Overpaying £30,000 doesn’t trigger 3% on the whole lot — only the £10,000 above your annual allowance is charged, so the ERC is just £300. And splitting the overpayment across two deal years (£20,000 now, £10,000 after your allowance resets) avoids the charge entirely. The overpayment allowance is the most underused ERC-free tool there is.
The break-even — charge, saving, time left
This is where most calculators stop and ours doesn’t. Knowing the charge is £6,000 tells you nothing on its own. The decision turns on three numbers in a fixed order: the charge, the annual saving from a cheaper deal, and the time you have left. Get them in the right order and the answer falls out. Here’s the chain:
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1
The raw charge — what leaving costs today
Your balance times the ERC band. This is the number you’re weighing everything else against. Add any new arrangement and valuation fees to it — they’re part of the cost of switching, not a footnote.
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2
The annual saving — the engine that pays it back
The new rate gap times your balance. A rate 1% lower on £200,000 saves £2,000 a year. This is what recovers the charge — and the smaller the gap, the weaker the case for paying anything at all.
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3
The payback — and whether time allows it
Charge divided by annual saving gives the months to break even. £6,000 ÷ £2,000 a year is 36 months. If your current deal has only 18 months left, you’d switch to a worse rate before ever recovering the penalty — so you wait.
The same £6,000 charge, three verdicts
Watch the answer flip as the rate gap and time left change:
The same £6,000 charge is a clear yes, a clear no, or a coin-flip — depending entirely on the rate gap and how long your deal has to run. Nothing about the penalty changed. The rule of thumb that falls out: paying an ERC is usually worth it only when you’re early enough in a high-rate deal that a much cheaper rate has years to do its work. Late in a deal, or when the rate gap is small, the charge rarely earns itself back — and waiting for the deal to end, where you pay nothing, quietly wins.
The routes that pay no charge at all
Before you reach for the chequebook, three options sidestep the ERC entirely. Waiting until the deal ends — most lenders let you switch penalty-free in the final months, often arranging a product transfer in advance. Porting your deal to a new property if you’re moving, since the loan isn’t actually repaid. And overpaying within the annual 10% allowance, which chips away at the balance — and at the future charge, since the ERC is a percentage of a shrinking number — without ever paying a penalty. The charge is only unavoidable if none of these fit your timing.
Two scenarios that change the verdict
What if…
You waited instead of paying the charge?
What if…
You overpaid within the allowance instead?
Key early repayment charge terms explained
ERCs sit at the join of mortgage admin and personal finance jargon. The ten terms below cover what you’ll meet on your mortgage statement and when talking to a lender or broker about leaving a deal early.
- Early repayment charge ERC
- A fee for repaying all or part of your mortgage before the deal period ends — almost always a percentage of the balance you still owe, typically 1% to 5%. Set out in your offer and annual statement, and regulated by the FCA.
- Outstanding balance
- What you still owe on the day you redeem, including interest accrued that month. The ERC is calculated on this figure, not the original loan — so the same percentage produces a smaller charge the longer you’ve been paying down.
- Tapered ERC
- An ERC structure where the percentage falls each year of the deal — for example 5% in year one down to 1% in the final year. Rewards staying, and means the charge you’d pay shrinks the closer you get to the end.
- Deal period
- The introductory period of a fixed, tracker, or discount mortgage during which the ERC applies. Once it ends and you roll onto the standard variable rate, there’s normally no charge to leave.
- Standard variable rate SVR
- The lender’s default rate you roll onto when your deal ends. It usually carries no ERC, so you can leave any time — but it’s often more expensive than a new deal, so most people switch rather than sit on it.
- Overpayment allowance
- The amount you can repay above your normal monthly payment each year without triggering a charge — most commonly 10% of the balance. Only overpayments above this are charged, and only on the excess.
- Porting
- Transferring your existing deal to a new property, which avoids the ERC because the loan isn’t repaid. Most fixes are portable, but the lender re-checks affordability and the sale and purchase have to line up in time.
- Product transfer
- Switching to a new deal with your current lender, often arranged in the final months of your existing deal with no ERC and minimal paperwork — no new affordability check or valuation in many cases.
- Redemption
- Paying off a mortgage in full — whether to remortgage elsewhere, sell the property, or clear the debt outright. Redeeming during the deal period is what triggers the ERC.
- Break-even point
- The point at which the interest saved on a new, cheaper deal equals the ERC and fees paid to switch. Past it, you’re saving money; before it, you’re behind. The single most useful number when deciding whether to leave.
Five mistakes people make with early repayment charges
ERCs punish guesswork. These five errors, drawn from the recurring r/UKPersonalFinance and r/HousingUK threads on leaving a fix early, are how borrowers either overpay a needless penalty or talk themselves out of a good move.
Calculating the charge on the original loan
The ERC is on what you owe now, which is lower after years of payments — not the amount you first borrowed. Using the original figure overstates the cost, sometimes by thousands, and can scare you out of a switch that would actually have paid. Always take the balance from your latest statement.
Cost: overstating the charge by thousands Fix: use the current balance, not the loanForgetting the charge tapers down
People quote the year-one percentage from memory — but on most deals it falls every year. Check the band that applies in the year you actually plan to leave, not the headline rate. A 5% charge in year one might be 2% by the time you’re thinking of moving, changing the whole decision.
Cost: assuming a 5% charge that’s now 2% Fix: read the band for your actual yearThinking any overpayment triggers a charge
Many borrowers leave money in a savings account because they assume overpaying their mortgage means an ERC. It doesn’t — you can overpay up to 10% of the balance a year for free, and even above that, only the excess is charged. Spreading a large overpayment across two deal years can avoid the charge entirely.
Cost: missing free, interest-saving overpayments Fix: use the 10% allowance every yearMissing the porting option when moving
If you’re moving home, you may not need to pay the ERC at all. Porting transfers your deal to the new property, sidestepping the charge because the loan isn’t repaid. Repaying and re-borrowing when you could have ported is an expensive default — check portability before assuming you’re stuck with the penalty.
Cost: a needless charge when moving home Fix: ask whether your deal can be portedLooking at the charge without the saving
A £10,000 ERC is irrelevant if a new deal saves £12,000 before you’d have left anyway — and a £2,000 charge is a bad idea if it never pays itself back. Always weigh the charge against the annual saving and the time left. The charge in isolation tells you nothing about whether leaving is smart.
Cost: a good switch refused, a bad one taken Fix: divide charge by saving, check time leftFrequently asked questions
How is a mortgage early repayment charge calculated?
An early repayment charge is your outstanding balance multiplied by the ERC percentage set in your deal. If you owe £200,000 and the charge is 3%, the ERC is £6,000.
The percentage usually falls each year of the deal, so check the band that applies in the year you actually plan to leave — it’s often lower than the headline rate quoted when you took the mortgage. The charge is always on what you owe now, not the original loan.
How much is a typical early repayment charge in the UK?
Most UK early repayment charges fall between 1% and 5% of the outstanding balance. Five-year fixes often start at 5% and step down to 1% in the final year, while two-year fixes are commonly 2%, or 2% then 1%.
The exact figure is set out in your mortgage offer and on your annual statement. A small number of older deals use a months’-interest basis instead of a flat percentage, but the principle is the same.
Can I avoid paying an early repayment charge?
Yes, in three main ways. Wait until the deal ends — most lenders let you switch penalty-free in the final months, often arranging a product transfer in advance. Port your deal to a new property if you’re moving, since the loan isn’t actually repaid.
Or stay within the annual overpayment allowance — usually 10% of the balance — which lets you repay extra without any charge. The ERC is only unavoidable if none of these fit your timing. Use the Overpayment Calculator to see how much the allowance lets you clear.
Is the early repayment charge worth paying to remortgage?
It depends on the saving and the time left. Paying the charge is usually worth it only when a much cheaper rate has years to recover the cost. Divide the charge plus any new arrangement and valuation fees by the annual interest saving from a new deal — that gives the payback in months.
If your current deal ends before that payback point, waiting is cheaper, because you’d switch penalty-free anyway. A £6,000 charge against a £2,000-a-year saving takes 36 months to break even — fine with four years left, a mistake with eighteen months. Model the new deal with the Remortgage Calculator.
Is the charge based on what I borrowed or what I owe?
It’s based on what you still owe on the day you repay, not the amount you originally borrowed. Years of payments reduce the balance, so the same percentage produces a smaller charge later in the deal.
This is why people often overestimate the cost — they apply the percentage to their original loan rather than their current balance. Always take the figure from your latest mortgage statement.
Do I pay a charge if I overpay my mortgage?
Only if you overpay above your annual allowance, which is typically 10% of the balance. Overpayments within the allowance are completely free of any charge.
If you go above it, only the excess is charged — overpaying £30,000 against a £20,000 allowance means the ERC applies to £10,000, not the whole £30,000. Spreading a large overpayment across two deal years can avoid the charge altogether, since the allowance resets each year.
Does an early repayment charge apply on the standard variable rate?
Normally no. The ERC applies during the deal period of a fixed, tracker, or discount mortgage. Once that ends and you roll onto the lender’s standard variable rate, you can usually repay or switch at any time without a charge.
That said, the SVR is often more expensive than a new deal, so sitting on it to stay charge-free can cost more in interest than an ERC would have. It’s a freedom worth having, not usually a place to stay.
What happens to the ERC if I port my mortgage?
Porting moves your existing deal to a new property, so the ERC isn’t triggered at all — the loan continues rather than being repaid. Most fixed deals are portable, but it isn’t automatic.
The lender re-checks affordability, and the timing of your sale and purchase has to line up. If the windows miss, you can be charged the ERC and then refunded once you re-borrow — or not refunded, if the gap is too long. Confirm your deal’s porting terms before relying on it.
Related calculators
An early-exit decision touches the new deal, the overpayment route around it, and the wider remortgage picture. These calculators handle each piece.
Methodology & sources
How the maths works
The early repayment charge is calculated as the outstanding balance multiplied by the ERC percentage from your deal’s band for the relevant year. Where a lender uses a months’-interest basis instead, the equivalent interest figure replaces the percentage. The break-even test then divides the total cost of leaving — the charge plus any arrangement and valuation fees — by the annual interest saving from a new rate, giving the payback period in months.
That payback is weighed against the time remaining on the current deal: if the deal would end before the charge is recovered, waiting and switching penalty-free is the cheaper route. The calculator shows the charge and the break-even so you can see both halves of the decision, not just the penalty.
Assumptions and conventions used
- ERC: outstanding balance × ERC percentage for the relevant year
- Annual saving: rate gap × outstanding balance (interest, simplified)
- Break-even: (charge + switching fees) ÷ annual saving, in months
- Taper: bands typically fall each year — check your own offer
- Overpayment allowance: commonly 10% of the balance a year, ERC-free
- Months’-interest ERCs exist on some older deals; principle is the same
- Bands and rates shown are illustrative, not live market figures