Is It Worth Paying the ERC to Remortgage?
Frequently Asked Questions
An ERC is a fee charged by your lender for paying off your mortgage (or overpaying) before the end of your current deal. It is typically a percentage of the outstanding balance, reducing each year.
If the interest saving over the remaining deal period exceeds the total cost (ERC plus fees), it may be worth switching. This calculator shows the break-even point.
Common ERC structures: 5% in year 1, 4% in year 2, 3% in year 3, 2% in year 4, 1% in year 5. Some lenders use flat rates. Always check your mortgage offer document.
Most mortgages allow overpayments of up to 10% of the outstanding balance per year without an ERC. Check your mortgage terms — overpaying beyond this limit can trigger charges.
If you're moving house, 'porting' your existing mortgage to the new property avoids the ERC. Not all mortgages are portable, and the new property must meet the lender's criteria.
Your mortgage reverts to the lender's Standard Variable Rate (SVR), which is typically 1-3% higher than competitive rates. Remortgaging before reversion avoids this.
Most lenders allow you to secure a new deal 3-6 months before your current deal ends. Some offer 6+ months. Locking in early protects against rate rises.
Most tracker mortgages have no ERC (they track the base rate and can be exited at any time). Some have them for an initial period — always check your mortgage offer.
ERC, arrangement/product fees for the new deal, valuation fees, legal/conveyancing costs (sometimes free for remortgages), and any broker fees.
Some lenders allow this, but it increases your debt and interest costs. It's generally better to pay the ERC from savings if you can.
Typical arrangement fees range from £0 to £2,000+. Fee-free deals often have slightly higher interest rates — calculate total cost (interest + fees) to compare properly.
A straightforward remortgage usually takes 4-8 weeks. Using a mortgage broker and getting all documents ready early can speed this up significantly.