UK Remortgage Early Exit Penalty (ERC) Calculator
Early Repayment Charges apply when you pay off or remortgage before your fixed-rate deal ends. They're typically 1-5% of the outstanding loan. On a £200,000 mortgage, a 3% ERC costs £6,000.
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A common mistake is assuming you must wait for your fixed rate to end. If rates have fallen significantly, paying an ERC to remortgage early can save thousands. However, you need to factor in new arrangement fees and legal costs.
Understanding whether paying an ERC is worthwhile requires comparing total costs on both options. Enter your current mortgage details and prospective new rate below to calculate your break-even point.
Mortgage Details
Include arrangement fees, valuation, legal costs
ERC Analysis
Early Repayment Charge
£0
Total Upfront Costs
£0
ERC + Fees
Monthly Payments
Break-Even Point
N/A
Net Saving Over Fixed Period
£0
Not Recommended
Key Considerations
- • ERCs can sometimes be added to your new mortgage
- • Some lenders offer ERC-free products (often at higher rates)
- • Moving house may allow penalty-free exit (porting rules vary)
- • Check if your lender has an overpayment allowance first
Worked example: £250,000 balance, 18 months left
You owe £250,000 at 5.4% with 18 months of a five-year fix to run, and the ERC is 3% — a £7,500 penalty. A new 4.1% deal cuts your monthly payment by about £190, so it takes roughly 40 months of savings to recover the charge, plus a £999 arrangement fee and a £150 exit fee (another 6 months).
Break-even lands well beyond the 18 months you have left, so waiting and securing a new rate 3–6 months early is the cheaper route. Flip the numbers — a 1% ERC of £2,500 on the same deal — and you recover the cost in about 13 months, which makes paying the charge worthwhile.
ERC calculator: typical charges by deal type (2026/27)
Use this table as a sense-check before you run the ERC calculator above. UK lenders apply the percentage to the balance outstanding on the day you redeem, so the cash penalty falls as you repay capital. Your mortgage offer document holds the exact figures.
| Deal stage | Typical ERC | £150,000 | £250,000 | £400,000 |
|---|---|---|---|---|
| 2-year fix (year 1) | 2% | £3,000 | £5,000 | £8,000 |
| 2-year fix (year 2) | 1% | £1,500 | £2,500 | £4,000 |
| 5-year fix (year 1) | 5% | £7,500 | £12,500 | £20,000 |
| 5-year fix (year 3) | 3% | £4,500 | £7,500 | £12,000 |
| 5-year fix (year 5) | 1% | £1,500 | £2,500 | £4,000 |
| Tracker / discount deal | 0–1% | £0–1,500 | £0–2,500 | £0–4,000 |
Charges shown are market-typical ranges, not lender quotes. Next: compare the whole switch with the remortgage break-even calculator, check your penalty-free allowance with the mortgage overpayment calculator, or model the whole move with the total mortgage cost calculator.
Understanding Early Repayment Charges (ERCs)
An Early Repayment Charge is a penalty fee charged by your lender if you repay your mortgage before the end of a fixed-rate or discounted period. ERCs exist because lenders lock in funding at specific rates and need to recover potential losses if you exit early.
How ERCs Are Calculated
ERCs are typically calculated as a percentage of your outstanding mortgage balance. The two main types are:
- Fixed percentage: The same rate applies throughout your fixed period (e.g., 3% whether you exit in month 1 or month 23 of a 2-year fix)
- Sliding scale: The percentage decreases over time, typically by 1% per year remaining. A 5-year fix might start at 5% and reduce to 1% by year five
Why ERCs Can Wipe Out Rate Savings
A 1.5% rate reduction sounds attractive, but the maths can be deceptive. On a £250,000 mortgage, a 3% ERC equals £7,500. If your monthly saving from the new rate is £200, it takes over 37 months just to break even—longer than many fixed periods. Add in arrangement fees, valuation costs, and legal expenses, and the payback period extends further.
When Paying an ERC Can Make Sense
Despite the costs, there are scenarios where paying an ERC is financially justified:
- Significant rate difference: If the new rate saves you £400+ per month, break-even comes quickly
- Long remaining term: A lower rate over 20+ years compounds substantial savings
- Expected rate rises: Locking in a low rate before increases can justify upfront costs
- Life changes: Moving abroad, divorce, or inheritance might require immediate action
- Sliding scale near end: If your ERC has dropped to 1% with months remaining, the penalty is minimal
Frequently Asked Questions
Related Calculators
Explore our other mortgage tools to make informed decisions:
- Remortgage Break-Even Calculator - Calculate when remortgaging savings exceed costs (without ERC)
- Mortgage Overpayment Calculator - See how overpayments reduce your term and interest
- Total Mortgage Repayment Calculator - Understand the full cost of your mortgage over its lifetime
- Mortgage Stress Test Calculator - Check if you could afford rate rises
ERC calculator: more questions
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