How it works

An early repayment charge (ERC) may apply if you repay a mortgage during the contractual charge period. The basis can be a percentage of the loan, months of interest or another disclosed method, so this tool models only the percentage method you select.

1. The charge is a % of your balance

Multiply your outstanding balance by the ERC rate. For example, 3% of a £200,000 balance is £6,000.

2. The rate often steps down each year

The FCA Handbook uses 5%, 4%, 3%, 2% and 1% as a compliant illustration of a declining five-year charge. It is an example, not a market rule or a statement of your deal.

3. You usually have a penalty-free allowance

MoneyHelper says many lenders permit up to 10% a year without penalties. Your limit, measurement period and treatment of partial repayment are contract-specific, so enter your own percentage and check the offer.

4. Your exact figures are in your paperwork

Your real rate, tie-in end date and allowance are set by your lender and stated in your ESIS or mortgage offer. Ask for a redemption statement for the precise figure to a date.

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