An early repayment charge (ERC) is a fee imposed by lenders if you decide to pay off your mortgage earlier than originally agreed upon. This fee is usually calculated as a percentage of the outstanding loan balance, and it can reduce or negate any savings that you would have made by remortgaging to a new deal.

Your early repayment charge amount will be on your mortgage illustration that you will have been given when your mortgage was submitted. It is always best to seek the advice of a mortgage broker before you make the decision to remortgage or pay off your loan early, as they will be able to tell you whether or not the early repayment charge is payable and how much it will cost.

What happens if I re-mortgage early?

It is important to understand what early repayment charges may apply to your mortgage before remortgaging. The terms and conditions of your mortgage will indicate whether it has an ERC attached and how much it would be, so make sure you read them carefully.

Your ERC becomes payable if you choose to remortgage during your fixed period, or if you make lump sum overpayments that are more than the lender's allowed amount. If you are unsure how much your early repayment charge will be, speak to a mortgage broker or your existing lender.

Can I avoid paying early repayment charges?

There are circumstances when a provider will not impose an ERC, such as if you move to a new deal with the same lender or if your existing mortgage has expired and is now on the lender's standard variable rate. In either case, it is important to be aware that you may still need to pay an exit fee or other fees associated with switching to a new deal.

Therefore, when considering remortgaging, it is important to consider the cost of any early repayment charges, as well as the potential savings available from a new deal. This will ensure that you can make an informed decision on whether remortgaging is right for you.

If you would like more information about early repayment charges and if yours is payable, call us today at 0151 662 0188 or email [email protected]