What is an early repayment charge, and when does it apply?
By Arifa Shakoor · Reviewed by Seema Babber
· 4 min read
Quick summary
- An early repayment charge (ERC) is a fee some lenders apply if you repay or leave your mortgage deal before it ends.
- It is usually a percentage of the amount repaid and often reduces each year of the deal.
When an ERC applies
- Moving to a new lender before your deal ends
- Repaying more than your lender’s annual overpayment allowance
- Selling without porting your mortgage to the new home
How to avoid or reduce it
Check your mortgage offer for the ERC period and overpayment allowance. Timing a switch for when the deal ends, or porting your mortgage when you move, can avoid the charge.
Your home may be repossessed if you do not keep up repayments on your mortgage.
Sources
MoneyHelper — mortgages
Written by
Arifa Shakoor · Mortgage adviser
Arifa works with homeowners whose deals are ending, reviewing options early so there is time to decide without pressure.
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