Finance glossary
Early Repayment Charge — ERC
Also known as: ERC
In simple terms
An early repayment charge (ERC) is a fee your lender charges if you pay off or overpay your mortgage beyond an allowed limit during a deal period — for example if you remortgage or move before a fix ends.
On this page
What does early repayment charge mean?
An early repayment charge is a penalty a lender applies if you repay all or part of your mortgage earlier than the deal allows. It is most common during a fixed, tracker or discount period, where the lender expects to earn interest for the full deal term.
It is usually worked out as a percentage of the amount you repay early — often on a sliding scale, such as 5% in year one falling to 1% in the final year of a five-year fix.
How an early repayment charge works
The charge is triggered if you clear the mortgage, remortgage to another lender, or overpay beyond your yearly allowance during the deal period. Many deals let you overpay up to 10% of the balance each year without a charge — check your own terms.
The exact percentage and the allowance must be set out in your mortgage offer and illustration. Once the deal period ends and you are on the SVR, there is usually no ERC, which is one reason people time a move or remortgage for then.
How could this affect me?
An ERC can be a large sum — several thousand pounds on a big balance — so it can outweigh the savings from switching to a cheaper deal. Always compare the ERC against the saving before you move.
If you might move house, repay a lump sum, or think rates could fall, factor the ERC into your choice of deal. A shorter deal or one with a smaller ERC may suit you better even if the headline rate is slightly higher.
Things to watch out for
- An ERC can run to thousands of pounds — check the exact amount before remortgaging or moving.
- Overpaying above your yearly allowance (often 10%) can trigger a charge, so stay within it.
- Some deals let you “port” the mortgage to a new home to avoid the ERC — confirm whether yours does.
- The charge usually falls year by year, so timing a move for later in the deal can cost less.
Know your rights
- Under FCA MCOB rules, any early repayment charge must be disclosed clearly in your mortgage illustration and offer, and must be a reasonable pre-estimate of the lender’s costs, not a punitive penalty.
- You are entitled to ask your lender for the exact ERC that would apply on a given date before you act.
- If you believe an ERC was applied unfairly or not properly disclosed, you can complain and escalate to the Financial Ombudsman Service.
General information, not personal advice
Consumer Credit is an independent information service. We do not provide regulated financial advice or sell financial products. For advice on your own situation, speak to an appropriately authorised firm or a free service such as MoneyHelper. About Consumer Credit.
Sources
We checked this page against these official and authoritative sources.
- FCA, MCOB 12 — charges, including early repayment charges (opens in a new tab). Accessed 22 Aug 2026.
- MoneyHelper, Mortgage-related fees and charges explained (opens in a new tab). Accessed 22 Aug 2026.