An early repayment charge (ERC) can feel like a hard "no" to switching mortgage early, but it isn't always the wrong move. This calculator works out the exact break-even point, the month at which the new rate's savings have recouped the ERC and any new fees, so you can compare it honestly against how long you'd otherwise be stuck on your current deal.
This is a general education tool, not financial advice; get a formal mortgage illustration from your lender or a broker before making a switching decision, since real ERC schedules and product fees vary by lender and product.
How the break-even calculation works
The calculation compares two numbers: the total cost of switching now (the ERC plus the new product fee) against the monthly saving the new rate delivers versus your current rate, on the same outstanding balance and remaining term. Dividing the total upfront cost by the monthly saving gives the break-even point in months, the point at which the switch has paid for itself. If that break-even point falls before the number of months left on your current deal, switching now is generally the better move; if it falls after, you'd likely be better off waiting for your current deal to end naturally and switching without the ERC.
Product transfer versus remortgage
| Product transfer | Remortgage | |
|---|---|---|
| Lender | Stays with your existing lender | Moves to a new lender |
| Affordability re-check | Usually not required | Usually required, a fresh full assessment |
| Valuation and legal work | Usually not required | Usually required |
| Speed | Generally faster | Generally slower |
| Additional borrowing | Sometimes available, limited | Often more flexible |
A product transfer is worth checking first if your current lender's own new rates are competitive, since it typically avoids legal fees and a fresh credit check entirely. A full remortgage becomes worth the extra process when a different lender's rate, or the ability to borrow more, genuinely outweighs that convenience.
Most lenders let you agree a new rate, whether a product transfer or a new remortgage offer, up to around six months before your current deal's end date, with the new rate simply taking effect once the old term expires. This means the real decision for many people isn't "switch now and pay the ERC, or do nothing," it's "switch now and pay the ERC, or wait until the six-month window opens and switch for free." The calculator above helps you weigh the first option against the cost of simply waiting.
Frequently asked questions
What is an early repayment charge on a mortgage?
An early repayment charge, or ERC, is a fee your current lender charges if you repay or switch away from your mortgage before a fixed or discounted deal period ends. It's typically calculated as a percentage of the outstanding balance, commonly reducing each year through the deal, for example 5% in year one falling to 1% in year five of a five-year fix.
How do I know if paying an ERC to remortgage early is worth it?
Compare the total upfront cost of switching, the ERC plus any new product fee, against the monthly saving the new rate offers versus your current rate. Dividing the upfront cost by the monthly saving gives a break-even point in months; if that break-even point falls before your current deal would have ended naturally, switching early is generally worth considering.
What's the difference between a product transfer and a remortgage?
A product transfer moves you to a new rate with your existing lender without a full new application, valuation, or legal process, and is usually faster with lower or no fees. A remortgage moves you to a new lender entirely, generally involving a fresh affordability assessment, valuation, and legal work, but can access better rates or additional borrowing not available from your current lender.
Can I lock in a new mortgage rate before my current deal ends?
Yes. Most lenders let you secure a new rate, sometimes through a product transfer or a new remortgage offer, up to around six months before your current deal expires, without paying the ERC, since the new rate simply takes effect once the old deal's term is up.
Continue your research
About the author
✓ Editorially reviewed — all Poqet guides are checked for factual accuracy before publication and updated when UK rates or legislation change. Editorial Policy