Mortgage holders can be hit with early repayment charges (ERCs) if they clear their mortgage early or pay more than their permitted overpayment amount for the year. This is usually 10% of the outstanding loan balance, but can sometimes be more flexible.
Here you will find a calculator that can help you work out how much you will pay in ERCs if you are considering setting up or paying extra towards your mortgage debt.
What is an early repayment charge mortgage calculator?
Early repayment charge calculators like the one on this page can tell you how much you will pay in ERCs if you clear your mortgage early or overpay on it by a certain amount.
This tool is useful for anyone who is planning to do either of those things as it is important to draw up a budget when plotting major financial decisions, but it’s a good idea to consult with an expert, like one of our mortgage brokers, before you make any final decisions.
How this calculator works
The calculator will tell you how much your early repayment charge will amount to based on the below variables that it will prompt you to enter:
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Outstanding mortgage balance: Enter the amount remaining on your mortgage
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ERC rate: The rate ERCs are charged at by your lender. It is usually between 1-5%, with higher percentages reserved for borrowers with a while to go on their term.
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Annual overpayment allowance: Most lenders set this at 10% but you can manually change it to lower, no limit or a custom amount as some mortgages have a flexible cap
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Amount you want to pay off: Enter your full mortgage balance to find out how much your ERC would be for a complete redemption, or a smaller amount for a lump sum.
Our calculator will take all of the information you have entered and present you with a full breakdown of how much you will pay in ERCs for clearing your mortgage or overpaying on it.
It’s a good idea to talk to a broker once you’re done for more bespoke calculations and advice on whether overpaying is in your interest compared to the alternatives.
Get expert advice about ERCs and mortgages
Example calculations
Our early repayment charge calculator can produce two types of results: one for a partial overpayment and one for a full mortgage redemption.
Here are two example calculation tables that demonstrate how the variables - such as the standard 10% allowance and the ERC rate - impact the final cost.
Example 1: Partial Overpayment (Lump Sum)
This scenario applies when a borrower wants to pay off a chunk of their debt that exceeds their annual "penalty-free" allowance.
Input Data:
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Outstanding Balance: £200,000
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Annual Allowance: 10% (£20,000)
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ERC Rate: 3%
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Planned Payment: £50,000
|
Calculation Component |
Value |
|
Total Amount to Pay Off |
£50,000 |
|
Penalty-Free Allowance (10%) |
- £20,000 |
|
Amount Subject to ERC |
£30,000 |
|
ERC Rate Applied |
3% |
|
Total Early Repayment Charge |
£900 |
Example 2: Full Mortgage Redemption
This scenario applies if a borrower is clearing the entire balance early, perhaps due to a move or remortgage before their fixed term ends.
Input Data:
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Outstanding Balance: £150,000
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Annual Allowance: 10% (£15,000)
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ERC Rate: 5% (Higher rate for longer remaining terms)
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Planned Payment: £150,000
|
Calculation Component |
Value |
|
Total Mortgage Balance |
£150,000 |
|
Penalty-Free Allowance (10%) |
- £15,000 |
|
Amount Subject to ERC |
£135,000 |
|
ERC Rate Applied |
5% |
|
Total Early Repayment Charge |
£6,750 |
Important Considerations
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Varied Rates: ERC rates are often tiered, meaning you might pay 5% in year one, 4% in year two, and so on.
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Custom Allowances: While 10% is the standard, some lenders offer more flexible caps or no limits at all.
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Expert Advice: Because these charges can be significant, it is recommended to speak with a mortgage broker to see if overpaying is truly in your best interest compared to other financial options.
How accurate is this calculator?
Our early repayment charges mortgage calculator produces accurate results based on the information fed into it, but your exact ERCs may vary as it may be unclear what kind of ERC rate you will be charged, as some borrowers might not have this information to hand.
This is a good reason to speak to a mortgage broker before you proceed as they can liaise with your lender to obtain this information for you and draw up bespoke calculations.
Moreover, they will also break down these calculations for you and offer personalised advice on whether it’s in your best interest to take the ERC hit. They can also explore alternative options with you, including switching to a new lender with a more flexible ERC policy.
Why choose Money Helpdesk for your mortgage needs?
You need more than just a good calculator to determine whether it’s worth paying ERCs to settle your mortgage or reduce the outstanding balance on it.
While our ERC calculator is a good starting point, speaking to one of our mortgage brokers for expert advice is recommended before you make any final decisions. Here are just a few of the reasons why our happy customers choose our mortgage advisory service:
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Our brokers can offer specialist advice about overpayments and ERCs
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They are whole-of-market and 100% independent
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We are 5-star rated on leading review websites
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Our advisers can help you avoid unnecessary ERCs entirely
Ready to take advantage of a free, no-obligation chat with a mortgage broker who specialises in ERCs and mortgage overpayments? Get started here.
FAQs
Your ERC rate is set by your lender; you can find this information in your original mortgage offer document or by contacting your mortgage lender directly.