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Home » Mortgage FAQs » What happens if I want to close my mortgage before the end of the term?

If you repay your mortgage before the end of the term, there may be a charge payable to the lender, called an ‘early repayment charge’. The highest charges are usually in the early years of the mortgage, typically tied in to the same period as the initial ‘special’ rate (fixed, discount etc), but sometimes extending beyond this. Where the charge extends beyond the initial period it is called an ‘overhang’. The early repayment charge varies between lenders and products but is typically between 1% – 7% of the total mortgage amount borrowed for 1 – 10 years. Thus for a £100,000 mortgage there could be an early repayment charge of up to £7,000!
Clearly if you intend to repay your mortgage in the early years it is important to choose a mortgage with low or nil early repayment charges.

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