What an early repayment charge actually is
An early repayment charge (often called an ERC) is a fee your lender applies if you leave your current mortgage deal before its fixed period ends. That can happen if you remortgage with another lender, switch to a new deal early, or pay off a lump sum larger than your annual overpayment allowance. The lender set its pricing on the assumption you would stay for the full term, and the charge exists to cover the gap when you don't.
The charge is usually a percentage of your outstanding balance, the amount you still owe on the mortgage, rather than a flat fee. That means the same percentage can mean very different amounts depending on how much you owe, which is why a rough guess is rarely good enough once real money is involved.
Why the amount changes depending on where you are in your deal
Most lenders taper the charge down as the fixed-rate deal runs its course, so leaving in year one of a five-year fix usually costs more than leaving in year four. The exact structure, the percentage at each stage and how it steps down, is set out in your mortgage offer document and varies from one lender to the next. There is no standard rate across the market, so a figure that applied to a colleague's mortgage or a number you saw quoted online won't necessarily apply to yours.
This is worth sitting with for a moment, because it's the single most common source of surprise when people come to remortgage: they assume the charge from two years ago still applies, when it has already stepped down.
What the early repayment charge estimator can tell you
The early repayment charge estimator takes your outstanding balance, your remaining term, and the ERC percentage that applies at your current stage, and turns them into an illustrative figure for what leaving now might cost. It uses the numbers you enter. It is not a quote, and it can give you a wrong answer if any of those inputs are off, particularly the percentage, which is the one figure the tool cannot know unless you supply it correctly.
Where to find your actual ERC percentage
Your mortgage offer document will state the charge and how it steps down over the fixed period. If you can't find it or aren't sure you're reading it correctly, your lender can confirm the current figure directly. The UK mortgage lenders directory lists which lenders operate in the market and how they're regulated, though it doesn't publish rates or charges, because those change and are specific to your mortgage.
Mistakes that make people misjudge their charge
- Assuming remortgaging always wins. A new deal might carry a lower rate, but if the early repayment charge is large enough, staying put until the fix ends, even on your lender's Standard Variable Rate (SVR), the higher rate you're moved onto automatically once your fixed deal finishes, can still work out cheaper overall.
- Working from an old percentage. Because the charge tapers over the life of the deal, a figure that was correct a year ago is probably wrong now. Check the current stage, not the one you remember.
- Mixing up the ERC with other fees. Some lenders also charge a small fixed exit or administration fee for closing the mortgage account. That's separate from the early repayment charge and much smaller, but the two get lumped together in conversation, which muddies the real comparison.
- Overlooking a product transfer. A product transfer, moving to a new deal with your existing lender instead of switching lenders, often avoids triggering the early repayment charge at all, because you're not actually leaving the mortgage. It's worth asking your lender whether this route is open to you before assuming a full remortgage is the only option.
What to do with the number once you have it
An estimate on its own doesn't tell you what to do. It tells you one side of a comparison: what leaving early would cost you. Set that against what staying on your lender's SVR would cost over the same period, and against what a new deal might realistically offer, before deciding anything. The what your number means page walks through that comparison in more detail, and the six-month checklist sets out when to start looking relative to your fix end date.
Beyond that, this is where a broker earns their place in the process. This site can show you an illustrative figure; a broker can confirm your actual charge with your lender, weigh it against the deals genuinely available to you, and handle the application. That's a different job from the one this estimator does, and it's the sensible next step once you have a number to work from.