Early Repayment Charge Calculator

Calculate early repayment charges and analyze whether paying off your mortgage early saves money. Compare ERCs with interest savings and investment returns.

ERC Calculation
Savings Analysis
Cost vs Benefit

Mortgage & ERC Details

Enter your current mortgage information and ERC terms

Current Mortgage

£
Current outstanding mortgage balance
%
Your current mortgage interest rate
Years remaining on your current mortgage
£
Current monthly payment (automatically calculated)

Early Repayment Charge

How is your early repayment charge calculated?
When does the ERC period end? (leave blank if unknown)

Repayment Options

£
Amount you want to repay early
Are you making a partial payment or paying off completely?
%
Annual return you could earn by investing instead

Understanding ERCs

  • Purpose: Compensate lenders for lost future interest
  • Fixed Rate Deals: Usually have higher ERCs
  • Calculation Methods: Percentage, months of interest, or fixed amounts
  • Time Limits: Usually apply for 2-5 years
  • Exceptions: Death, unemployment may waive charges
  • Partial Payments: May be allowed without ERC up to certain limits

When to Pay ERCs

Consider Paying ERC If:

  • Large inheritance or windfall received
  • Interest savings exceed ERC cost
  • Want to be mortgage-free for peace of mind
  • Expect interest rates to rise significantly

Avoid ERC If:

  • Can earn higher returns investing elsewhere
  • ERC is very high relative to savings
  • Close to end of ERC period
  • Need funds for other priorities

Frequently Asked Questions

What is an Early Repayment Charge (ERC)?

An Early Repayment Charge (ERC) is a fee charged by mortgage lenders when you pay off all or part of your mortgage before the agreed term ends. ERCs typically apply during fixed-rate periods and can be calculated as a percentage of the outstanding balance, months of interest, or a fixed amount.

How are Early Repayment Charges calculated?

ERCs are calculated using different methods:

  • Percentage of outstanding balance (typically 1-5%)
  • Number of months' interest (usually 3-6 months)
  • Fixed amount specified in your mortgage agreement
  • Reducing percentage that decreases annually

The exact method depends on your lender and mortgage product.

When is it worth paying an Early Repayment Charge?

Paying an ERC may be worthwhile if:

  • The interest you'll save exceeds the charge amount
  • You can't earn higher returns investing the money elsewhere
  • You're close to retirement and want mortgage freedom
  • You expect interest rates to rise significantly

Use our calculator to compare the total costs and make an informed decision.

Can I make partial repayments without paying an ERC?

Many lenders allow penalty-free overpayments up to 10% of the outstanding balance per year. Some lenders allow higher percentages or have different rules. Check your mortgage terms to understand your allowances, and use our calculator to determine the optimal overpayment strategy.

How do I minimize Early Repayment Charges?

To minimize ERCs:

  • Wait until the ERC period ends
  • Use annual overpayment allowances
  • Time repayments for rate review periods
  • Consider portability if moving house
  • Check for waiver circumstances like unemployment or death

Always review your mortgage terms first and consult with your lender.

What factors should I consider before making an early repayment?

Consider these key factors:

  • Total ERC cost vs. interest savings over time
  • Alternative investment returns you could earn
  • Emergency fund requirements - maintain 3-6 months expenses
  • Other debt priorities - pay off higher-rate debt first
  • Future financial goals - retirement, education costs
  • Interest rate environment - fixed vs. variable rates