What an early repayment charge is
It is what your lender charges if you repay, or move, a mortgage that is still inside its deal period. It is the reason you cannot simply jump onto a cheaper rate the moment one appears. The typical range is 1% to 5% of the amount outstanding. On a £200,000 balance that is somewhere between £2,000 and £10,000.
The taper is a convention, not a rule
The textbook structure is a taper: 5% in year one of a five-year fix, then 4%, 3%, 2%, 1%. Moneyfacts describes tapering as typical — and also notes that some lenders charge a flat percentage throughout. There are products where the charge is 3% in every year, and products where it drops in steps that do not follow the calendar year at all.
The only reliable source for your own charge is your own offer document or mortgage illustration, sometimes called the ESIS or Key Facts Illustration. It sets out the charge for each year of the deal. Ask your lender for the charge on today's balance, in pounds, not just the percentage.
Two things move at once
As a deal runs down, the percentage falls and so does the balance it is charged on. Those compound. Moneyfacts' worked example: £200,000 on a five-year fix, leaving in year one at 5%, costs £10,000. The same mortgage in its final year on a reduced balance of £150,000 at 1% costs £1,500.
Three ways to avoid it entirely
Wait for the deal to end. Once the fixed period is over the charge normally falls away. You are on the Standard Variable Rate, which is expensive, but it is the one rate you can walk away from for free.
Use the overpayment allowance. Almost every fixed-rate mortgage lets you overpay up to 10% of the balance a year without triggering the charge.
Lock a rate early. Under the Mortgage Charter you can secure a new deal up to six months before your fix ends, and still switch to a better one if rates fall before the new term starts. Check the deadline with your lender: gov.uk says "until their new term begins", while UK Finance's own FAQ says "up to two weeks before". Ask yours in writing.
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