Early Repayment Charge on Your Mortgage When Selling
How to check if you will be hit with an early repayment charge when selling, how much it could be, and ways to minimise the cost.
What you need to know
An early repayment charge (ERC) is a fee your lender charges if you repay your mortgage during a fixed-rate or discounted-rate period. ERCs typically range from 1% to 5% of the outstanding balance and can cost thousands of pounds when selling. You can avoid or reduce the charge by timing your sale, porting your mortgage, or negotiating with your lender.
- ERCs only apply if you sell during a fixed-rate, discounted-rate, or tracker deal period. Once you move onto the standard variable rate, there is no ERC.
- The charge is typically 1% to 5% of your outstanding mortgage balance, decreasing each year of the deal. On a £200,000 mortgage, a 3% ERC costs £6,000.
- Request a redemption statement from your lender before listing so you know the exact cost and can calculate your true net proceeds.
- Porting your mortgage to a new property can avoid the ERC entirely, though your lender must approve the new property and reassess affordability.
- The ERC is separate from the mortgage exit fee (£50 to £300), which applies whenever a mortgage is closed regardless of timing.
Pine handles the legal prep so you don't have to.
Check your sale readinessIf you are selling your home while still locked into a mortgage deal, there is a good chance you will face an early repayment charge. It is one of the most significant — and most commonly overlooked — costs of selling a property in England and Wales.
This guide explains what an early repayment charge is, how to check whether you will be affected, what it is likely to cost, and the practical steps you can take to minimise or avoid the charge altogether. If you are planning to sell your home and still have time on your mortgage deal, read this before you instruct an estate agent.
What is an early repayment charge?
An early repayment charge (ERC) is a penalty your mortgage lender applies if you repay your mortgage — in full or in part — before the end of an agreed deal period. Deal periods are the introductory terms attached to fixed-rate, discounted-rate, and some tracker mortgages. They typically last two, three, or five years.
Lenders impose ERCs because when they offered you a preferential rate, they expected to earn interest over the full deal period. If you repay early, they lose that income. The ERC compensates them for that loss. The Financial Conduct Authority (FCA) regulates how lenders apply ERCs, requiring them to disclose the terms clearly in your mortgage offer and to ensure the charges are not excessive.
Crucially, ERCs only apply during the deal period. Once your fixed or discounted rate expires and you move onto your lender's standard variable rate (SVR), there is no ERC to pay. This is an important distinction for sellers who are planning their timeline.
How much could an ERC cost you?
Early repayment charges are calculated as a percentage of your outstanding mortgage balance — not the original loan amount. The percentage typically decreases each year of the deal, so a five-year fixed-rate mortgage might charge 5% in year one, 4% in year two, and so on.
According to UK Finance, the trade body for the UK banking and finance industry, the majority of residential mortgage products carry ERCs of between 1% and 5%. The exact percentages are set out in your mortgage offer document.
Typical ERC rates by deal type
| Mortgage deal type | Common deal length | Typical ERC range | Example cost (£200,000 balance) |
|---|---|---|---|
| Two-year fixed rate | 2 years | 1% to 3% | £2,000 to £6,000 |
| Three-year fixed rate | 3 years | 1% to 3% | £2,000 to £6,000 |
| Five-year fixed rate | 5 years | 1% to 5% | £2,000 to £10,000 |
| Ten-year fixed rate | 10 years | 1% to 7% | £2,000 to £14,000 |
| Discounted variable rate | 2 to 5 years | 1% to 5% | £2,000 to £10,000 |
| Tracker rate (with ERC) | 2 to 5 years | 1% to 3% | £2,000 to £6,000 |
| Standard variable rate (SVR) | Ongoing | None | £0 |
Note that these are illustrative ranges. Your actual ERC percentage depends entirely on the specific product you took out. Always check your mortgage offer or request a redemption statement from your lender for the exact figure.
How ERCs typically reduce over a deal period
Most lenders structure ERCs on a sliding scale, so the charge decreases each year. This is designed to reflect the fact that the lender has already received some of the interest income they expected. Here is how a typical five-year fixed-rate ERC schedule might look:
- Year 1: 5% of the outstanding balance
- Year 2: 4% of the outstanding balance
- Year 3: 3% of the outstanding balance
- Year 4: 2% of the outstanding balance
- Year 5: 1% of the outstanding balance
- After year 5: 0% — no ERC applies
On a £200,000 balance, this means the cost of selling drops from £10,000 in year one to £2,000 in year five. Even waiting a single year can save thousands of pounds, which is why timing your sale is one of the most effective ways to reduce the overall cost.
How to check whether you face an ERC
If you are considering selling, finding out whether an ERC applies should be one of your first steps. There are three ways to check:
- Check your mortgage offer document. This is the document you received when you took out the mortgage. It will specify the deal period, the ERC percentages for each year, and the date the deal expires. If you took out the mortgage through a broker, they may have a copy on file.
- Log in to your lender's online portal. Most major lenders allow you to view your mortgage details online, including the remaining deal period and any applicable ERC.
- Request a redemption statement. Call your lender or write to them requesting a formal redemption statement. This document confirms your outstanding balance, any ERC that would apply if you repaid on a specific date, the mortgage exit fee, and the total redemption figure. Most lenders provide this within five working days. Your solicitor will also request one during the conveyancing process.
Having the redemption figure early allows you to calculate your true net proceeds from the sale. Without it, you could accept an offer only to discover that the ERC significantly reduces the cash you take away. Our guide to completion statements explains how the ERC feeds into the final financial breakdown your solicitor prepares before completion day.
ERC vs mortgage exit fee: understanding the difference
Sellers often confuse the early repayment charge with the mortgage exit fee. They are two separate charges, and understanding the difference matters for budgeting.
A mortgage exit fee (also called a deeds release fee or account closure fee) is a small administrative charge — typically £50 to £300 — that your lender applies whenever your mortgage account is closed. It applies regardless of timing. Whether you sell after two years or twenty, the exit fee is the same. It is essentially the cost of the lender processing the closure of your account and releasing the charge on your property title.
An early repayment charge, by contrast, only applies if you are still within a deal period. It is calculated as a percentage of the outstanding balance and can cost thousands of pounds. Most sellers will pay the exit fee; only those selling during a deal period will pay the ERC on top.
Both charges will appear on your completion statement and are deducted from your sale proceeds by your solicitor. For a full rundown of the costs that come off your sale proceeds on the day you complete, see our guide to hidden costs of selling a house.
Five ways to minimise or avoid an early repayment charge
While ERCs are contractual obligations, there are legitimate strategies to reduce or avoid the cost entirely.
1. Time your sale to avoid the deal period
The simplest way to avoid an ERC is to wait until your deal period expires. If your fixed rate ends in three months and the ERC is 2% on a £200,000 balance (£4,000), delaying the sale by a few months saves you that entire amount. You can begin preparing your property for sale — instructing an estate agent, completing your legal forms, and ordering searches — well before the deal expires, so you are ready to move quickly once the ERC window closes. Our guide on how to sell your house fast covers how to front-load preparation to minimise delays.
2. Port your mortgage to a new property
If you are selling and buying simultaneously, many lenders allow you to port your mortgage — that is, transfer your existing deal to the new property. This avoids the ERC because you are not actually repaying the mortgage; you are moving it. The MoneyHelper guide to moving home with a mortgage explains how porting works in practice.
Porting is not automatic, however. Your lender will reassess your income and expenditure against current affordability criteria, and the new property must meet their valuation requirements. If you need additional borrowing, the extra amount will typically be on a separate deal at current market rates. If you are buying a cheaper property, some lenders treat the reduction in loan size as a partial early repayment and may charge an ERC on the difference.
3. Use your annual overpayment allowance
Most fixed-rate mortgages allow you to overpay up to 10% of the outstanding balance per year without triggering an ERC. While this does not eliminate the charge entirely, making overpayments in the run-up to your sale reduces the balance on which the ERC is calculated. For example, if you overpay £20,000 on a £200,000 mortgage before selling, a 3% ERC drops from £6,000 to £5,400 — a saving of £600.
Check your mortgage terms carefully, as the overpayment allowance resets annually (usually on the anniversary of the deal or at the start of the calendar year). The FCA requires lenders to set out overpayment terms clearly in your mortgage offer.
4. Check whether your product has an ERC-free window
Some mortgage products include an ERC-free window — a period at the end of the deal during which you can repay without penalty. This is less common than it used to be, but it is worth checking your mortgage offer. Even a one-month window could be enough if you time your completion date carefully.
5. Negotiate with your lender in exceptional circumstances
If you are selling due to financial hardship, relationship breakdown, or other difficult circumstances, some lenders will consider reducing or waiving the ERC. This is not guaranteed, and lenders are under no obligation to do so, but the FCA's Treating Customers Fairly (TCF) principles mean they must consider requests made in genuine hardship. Document your circumstances and put your request in writing. If you are unhappy with the outcome, you can escalate to the Financial Ombudsman Service free of charge.
Worked example: selling with an ERC
To show how an ERC fits into the overall cost of selling, here is a realistic worked example for a seller in year three of a five-year fixed-rate mortgage.
- Sale price: £300,000
- Outstanding mortgage balance: £180,000
- ERC rate (year 3 of 5): 3%
- ERC cost: £5,400
| Cost item | Amount |
|---|---|
| Mortgage redemption (balance) | £180,000 |
| Early repayment charge (3%) | £5,400 |
| Mortgage exit fee | £150 |
| Estate agent fee (1.2% + VAT) | £4,320 |
| Solicitor fee (inc. VAT) | £1,200 |
| Disbursements | £150 |
| Total deductions | £191,220 |
| Net proceeds from £300,000 sale | £108,780 |
Without the ERC, the seller's net proceeds would be £114,180 — a difference of £5,400. For a full breakdown of every cost that comes off your sale proceeds, see our conveyancing costs breakdown.
When it might be worth paying the ERC
In some situations, paying the ERC and selling sooner makes financial sense. Consider it if:
- You are relocating for work and the cost of maintaining two homes (or paying rent alongside your mortgage) would exceed the ERC.
- Property prices are falling in your area and waiting could mean a lower sale price that outweighs the ERC saving.
- You are going through a separation and need torelease equity quickly to settle financial arrangements.
- You have found your ideal next home and the risk of losing it by waiting outweighs the ERC cost.
- Your deal period has almost ended and the ERC has reduced to a small amount — for example, 1% in the final year of a five-year fix.
A mortgage adviser can help you weigh the cost of the ERC against the financial and personal benefits of selling now. The MoneyHelper mortgage calculator is a useful starting point for running the numbers.
How the ERC appears in the conveyancing process
During the conveyancing process, your solicitor will request a redemption statement from your mortgage lender. This document sets out the exact amount needed to close your mortgage, including the outstanding balance, any accrued interest, the ERC (if applicable), and the mortgage exit fee.
The redemption figure is valid for a limited period — usually 14 to 30 days — because interest continues to accrue daily. If your completion date slips, your solicitor may need to request an updated statement. The ERC itself does not change within the same deal year, but the outstanding balance (and therefore the ERC in pound terms) may shift slightly.
On completion day, your solicitor receives the sale proceeds from the buyer's solicitor and uses them to pay off the mortgage (including the ERC), the estate agent, their own fees, and any other agreed costs. The remaining balance is transferred to your bank account, usually arriving the same day. For a step-by-step explanation of how this works, see our guides to hidden costs of selling a house and completion day costs.
Selling with an ERC: a practical checklist
If you know you will face an ERC, these steps will help you prepare and minimise the impact:
- Request a redemption statement early. Contact your lender as soon as you begin thinking about selling. Know the exact figure before you accept an offer.
- Calculate your net proceeds. Subtract the ERC, mortgage balance, exit fee, estate agent fee, and solicitor costs from the expected sale price. Make sure the numbers work for your onward plans.
- Check your deal end date. If it is within a few months, consider whether you can delay completion until after the ERC drops or disappears.
- Ask about porting. If you are buying another property, ask your lender whether you can port the mortgage to avoid the charge.
- Use your overpayment allowance. If you have spare cash, overpaying before selling reduces the balance on which the ERC is calculated.
- Review your completion statement carefully. Before completion day, check that the ERC on your completion statement matches the redemption statement from your lender.
- Prepare your property for sale early. Even if you are waiting for your deal period to end, you can complete your legal paperwork, order an EPC, and get your home ready for viewings so you can list the moment the ERC window closes.
How Pine helps sellers get ahead
If you are waiting for your ERC period to end before listing, that time does not have to be wasted. Pine helps sellers prepare their legal paperwork — including the TA6 and TA10 property information forms — with AI guidance, and order property searchesat near-trade prices, all before a buyer is even found. This means that when your deal period expires and you are ready to list, you can move straight into the conveyancing process without the usual weeks of delay. Front-loading the preparation turns dead time into a head start.
Sources and further reading
- Mortgages — Information for Consumers (Financial Conduct Authority)
- UK Finance — The Voice of Banking and Finance (UK Finance)
- Moving Home with a Mortgage (MoneyHelper, formerly Money Advice Service)
- Mortgage Calculator (MoneyHelper)
- Financial Ombudsman Service
- Mortgages and Home Finance: Conduct of Business Sourcebook (MCOB) (FCA Handbook)
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Frequently asked questions
What is an early repayment charge on a mortgage?
An early repayment charge (ERC) is a fee your mortgage lender charges if you repay all or part of your mortgage during a fixed-rate, discounted-rate, or tracker deal period. It is designed to compensate the lender for the interest they will lose because you are ending the deal early. ERCs are expressed as a percentage of the outstanding balance and typically range from 1% to 5%, decreasing each year as you approach the end of the deal period.
How much is a typical early repayment charge in the UK?
A typical early repayment charge in the UK ranges from 1% to 5% of the outstanding mortgage balance. For example, on a mortgage with a remaining balance of £200,000, a 3% ERC would cost you £6,000. The percentage usually decreases each year of your deal, so a five-year fix might charge 5% in year one, 4% in year two, and so on down to 1% in year five. Your mortgage offer document sets out the exact percentages that apply.
Do I have to pay an early repayment charge if I sell my house?
You will only pay an early repayment charge if you sell while still within a fixed-rate, discounted-rate, or tracker deal period. If your deal period has ended and you have moved onto your lender's standard variable rate (SVR), there is no ERC to pay. You will still face a separate mortgage exit fee of £50 to £300 regardless of timing, but this is a much smaller administrative charge. Always request a redemption statement from your lender before listing to confirm exactly what you owe.
Can I port my mortgage to avoid the early repayment charge?
Yes, many mortgage products allow you to port your existing deal to a new property, which means you keep your current rate and avoid the ERC. However, porting is not guaranteed. Your lender will reassess your affordability and the new property's suitability, and if you need to borrow more, the additional amount will be on a new deal at current rates. If you are buying a cheaper property, some lenders treat the reduction as a partial repayment and may charge an ERC on the difference.
What is the difference between a mortgage exit fee and an early repayment charge?
A mortgage exit fee is a small administrative charge, typically £50 to £300, that your lender applies whenever a mortgage account is closed, regardless of when you repay. An early repayment charge is a much larger penalty, usually 1% to 5% of the outstanding balance, that only applies if you repay during a fixed-rate or discounted-rate period. The exit fee is unavoidable when selling; the ERC can be avoided by waiting until your deal period ends or by porting your mortgage to a new property.
How do I find out if I will face an early repayment charge?
Check your original mortgage offer document, which sets out the deal period and the ERC percentages for each year. If you cannot find it, log in to your lender's online portal or call their customer service line and ask for a redemption statement. This document confirms your outstanding balance, any ERC that applies, and the total amount needed to close your mortgage. Most lenders provide it within five working days. Your solicitor will also request one as part of the conveyancing process.
Can I negotiate or reduce an early repayment charge?
Early repayment charges are contractual terms set out in your mortgage offer, so lenders are generally not willing to negotiate or waive them. However, in limited circumstances such as financial hardship, some lenders may agree to reduce or defer the charge. The Financial Conduct Authority requires lenders to treat customers fairly, so if you are in genuine difficulty, contact your lender to discuss your options. You can also complain to the Financial Ombudsman Service if you believe the charge is being applied unfairly.
Is it worth paying the early repayment charge to sell sooner?
Whether it is worth paying the ERC depends on your specific circumstances. If you are relocating for work, need to sell due to a relationship breakdown, or the property market is strong and you risk losing value by waiting, the cost of the ERC may be outweighed by the benefits of selling now. Compare the ERC cost against the potential loss from falling house prices, ongoing mortgage payments, and any rent you would need to pay elsewhere. A mortgage adviser can help you run the numbers for your situation.
Will my early repayment charge appear on the completion statement?
Yes, the early repayment charge will appear as a line item on your completion statement, which your solicitor prepares before completion day. The statement sets out all the deductions from your sale proceeds, including the mortgage redemption figure (which includes the ERC), solicitor fees, estate agent fees, and any other costs. Reviewing your completion statement carefully before completion is essential to ensure the figures match the redemption statement your lender provided.
Are early repayment charges regulated in the UK?
Yes, early repayment charges on regulated mortgage contracts are overseen by the Financial Conduct Authority (FCA). The FCA's Mortgages and Home Finance: Conduct of Business sourcebook (MCOB) requires lenders to disclose ERC terms clearly in the mortgage offer and to ensure charges are not excessive. If you believe an ERC has been applied incorrectly or unfairly, you can raise a formal complaint with your lender and, if unresolved, escalate it to the Financial Ombudsman Service free of charge.
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