Illustrative stepped ERC (FCA disclosure example)
| Illustrative stage | Illustrative rate |
|---|---|
| Illustrative year 1 | 5% |
| Year 2 | 4% |
| Year 3 | 3% |
| Year 4 | 2% |
| Year 5 | 1% |
Flat-rate ERC
| How it works | Detail |
|---|---|
| Flat rate throughout the charge period | Enter the rate from your own mortgage documents |
| This tool models | Full repayment × the selected percentage |
Frequently asked questions
How is an early repayment charge calculated?
The basis is contract-specific. It may be a percentage of the loan, months of interest or another disclosed method. This tool models full repayment using the percentage you select; 5% of £200,000 is £10,000.
Does the ERC go down each year?
It may decrease as a deal approaches its end, remain flat or use another formula. The FCA consumer page says the charge will usually decrease, but the terms of your mortgage decide the actual schedule.
Can I overpay without paying a charge?
MoneyHelper says many lenders allow up to 10% a year without penalties. Your allowance, measurement period and any charge above it are contract-specific, so check your mortgage offer before acting.
When does an early repayment charge apply?
The FCA says a lender is likely to charge one when a mortgage is repaid before the end of a fixed or discounted-rate deal, but some lenders do not. The charge period and triggers are stated in the mortgage terms.
Is the charge on the balance or on the amount I repay?
It depends on the disclosed basis. This calculator assumes full repayment and applies your selected percentage to the outstanding balance. It does not determine a partial-overpayment charge.
Where do I find my exact ERC?
It is set out in your ESIS (European Standardised Information Sheet) or mortgage offer/illustration. You can also ask your lender for a redemption statement, which shows the exact figure to a given date.
Is every mortgage covered by the same FCA rules?
No. The cited MCOB rules apply to regulated mortgage contracts. Product terms and regulatory status can differ, so buy-to-let, business or other specialist borrowing needs its own paperwork and advice.
This is a free, independent educational tool. Preset schedules are arithmetic illustrations, not typical-current-market claims. Your actual basis, rate, charge period, maximum and overpayment restrictions are set by the mortgage terms and disclosed in your ESIS, illustration or offer. This is not financial advice. Check your own paperwork and obtain an exact lender redemption figure before acting.
Sources: FCA — early repayment charges · FCA Handbook MCOB 5.6 — disclosure and cash examples · FCA Handbook MCOB 12.3 — reasonable ERC rules · MoneyHelper — paying a mortgage off early