Early Repayment Charge (ERC)

• When a loan or mortgage is repaid, or partly repaid, earlier than expected (before the end of any fixed, discounted, or capped rate period), many lenders charge a fee to cover the overall cost of the customer not keeping the loan for the agreed period. This particularly applies to certain types of mortgages, such as those with Fixed , Discounted or capped interest rates and to Cashback mortgages.

The early repayment charge was sometimes referred to as a redemption fee or Redemption penalty in the past.