Will I pay an early repayment charge if I remortgage before my deal ends?

Full answer

Early repayment charges exist because lenders price fixed and tracker deals assuming you will stay for the full term, and an ERC compensates them if you leave (by remortgaging, overpaying beyond an allowance, or selling) before that term ends. **How ERCs are typically structured** ERCs are usually a percentage of the amount being repaid early, and commonly taper down the longer you have held the deal -- for example, a 5-year fix might charge 5% in year one, 4% in year two, 3% in year three, and so on, though exact structures vary considerably between lenders and products. **Worked example** Someone with £200,000 outstanding on a 5-year fix decides to remortgage in year two, where the ERC is 4%. The charge would be 4% × £200,000 = £8,000, which needs to be weighed against any savings from switching to a better rate elsewhere. **When ERCs do not apply** ERCs generally do not apply once your current deal has ended and you have moved onto your lender's standard variable rate (or any follow-on rate with no remaining tie-in), so remortgaging at or after your deal's actual end date is normally ERC-free. Many deals also allow a limited annual overpayment allowance (commonly around 10% of the balance) without triggering any ERC. **When switching early can still be worth it** If interest rates have risen sharply, or you need to remortgage for another pressing reason (such as needing to release equity), the ERC cost sometimes still works out cheaper than staying on an increasingly uncompetitive rate, particularly late in the deal when the ERC percentage has tapered down -- this needs a specific cost comparison, not a blanket rule. **Product transfers versus full remortgages** Switching to a new deal with your EXISTING lender (a product transfer) sometimes avoids or reduces ERCs compared with moving to a different lender entirely, and can be arranged more quickly, though it is still worth comparing against the wider market. **Practical tip** Check your mortgage offer document or annual statement for the exact ERC percentage and end date of your current deal, and get a specific like-for-like comparison (new rate savings versus ERC cost) before remortgaging early, ideally with a broker who can run the numbers precisely.

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