First Direct Early Repayment Charge Explained

A First Direct early repayment charge (ERC) is a fee that may apply if you repay some or all of a mortgage before the end of a specified period. There is no single charge for every borrower: the amount and the circumstances that trigger it depend on the mortgage offer and product terms.

What an early repayment charge means

An ERC is a contractual charge associated with paying off a mortgage earlier than its terms allow without a charge. It can arise when you clear the mortgage by selling or refinancing, or when you make extra payments above the product’s permitted allowance. It is separate from the outstanding mortgage balance and from any interest due up to the repayment date.

First Direct is a UK mortgage lender, but its products and conditions can change over time. A borrower’s offer documents, mortgage account information and current lender guidance are the relevant sources for their own ERC—not an old example or a general description online.

When might First Direct charge it?

The charge is usually tied to a product’s initial deal period, such as a fixed-rate or tracker period, rather than necessarily lasting for the whole mortgage term. If the mortgage is repaid or certain overpayments exceed the allowed amount while the charge applies, an ERC may be due. After the relevant period expires, the product may no longer carry an ERC, but check the individual terms.

Situations to check include:

• Moving home: Selling a property and repaying its mortgage can trigger a charge if the deal period is still active. Whether a mortgage can be transferred to another property, and how that works, depends on the product and lender approval.
• Changing mortgage: Replacing the mortgage with a different deal or another lender may mean repaying the existing loan early.
• Overpaying: A product may permit some overpayments without an ERC, while charging for amounts beyond its limit. The allowance and how it is calculated are contract-specific.
• Paying off a lump sum: Inheritance, savings or a property sale may prompt a full or partial repayment. Ask how the lender calculates any applicable charge before sending money.

These are common circumstances, not confirmation that a fee will apply in a particular case. The exact wording of the mortgage agreement controls.

How the amount is worked out

ERCs are commonly described as a percentage of the amount being repaid, and product terms may specify different percentages at different points in the deal period. Other terms may define the calculation differently. Do not assume a percentage, date or allowance based on another borrower’s mortgage.

For illustration only, if a contract specified a 2% charge on a £10,000 repayment, the arithmetic would be £10,000 × 0.02 = £200. This is not a First Direct quote, current product rate or estimate of anyone’s actual charge. The chargeable amount, applicable rate, timing rules and any qualifying allowance must all be verified against the borrower’s documents.

Also distinguish the ERC from the mortgage redemption figure. A redemption figure is the total the lender says is needed to clear the account by a stated date. It can include the outstanding balance, interest to that date, an ERC if due, and other account-specific amounts. Because interest accrues over time, a figure provided for one date may not be valid for a later date.

How to check your own charge

1. Find your mortgage offer, product details or latest account information. Look for the ERC period, percentage or calculation method, and the terms for partial repayments.
2. Confirm the date the charge period ends. Check whether the date is tied to a product anniversary, a calendar date or another event specified in your contract.
3. Ask First Direct for a redemption statement or a written calculation for the exact repayment amount and date you are considering. If you are overpaying rather than clearing the mortgage, ask specifically how the allowance works and whether the proposed payment exceeds it.
4. Ask whether any other repayment or account fees apply and how long the quoted figure remains valid.
5. Compare the cost of paying now with the cost and timing of waiting, using figures from the lender and any relevant professional. This is a comparison of costs, not a guarantee that either option is suitable.

When contacting the lender, state whether you intend to repay the entire balance or make a partial payment. The rules can differ, and a full redemption quote may not answer an overpayment question.

Common misunderstandings

“Any overpayment causes an ERC.” Not necessarily. The contract may allow a defined amount of overpayment without a charge. Equally, making several smaller payments does not necessarily avoid the rules if they are counted together over a period.

“The ERC is the whole cost of leaving.” It may be only one component of the amount required. The outstanding balance and interest to the payment date remain relevant, and the lender’s redemption statement sets out the amount requested.

“The charge is always a fixed cash amount.” It may instead be calculated using a percentage or another method set out in the mortgage terms. A percentage-based charge can change when the amount repaid changes.

“A general online example tells me my charge.” It does not. Mortgage products, start dates, repayment history and wording differ. Only the terms for the specific account and a current lender calculation can confirm the figure.

Frequently Asked Questions

How do I find my First Direct early repayment charge?
Check your mortgage offer and account documents, then ask First Direct for a calculation based on the repayment amount and date. Request a redemption statement if you plan to repay the full mortgage.

Can I make overpayments without an ERC?
Possibly, if your product permits overpayments within a stated allowance. Check the allowance, how it is measured and what happens if you exceed it; do not rely on a generic percentage.

Can I avoid an ERC by waiting?
If the charge applies only during a defined product period, repayment after that period may be treated differently. Confirm the end date and any other charges with the lender before relying on this.

Does selling my home automatically mean I pay an ERC?
No general answer applies to every mortgage. Selling may require repayment, but whether a charge applies depends on the account’s terms, timing and any relevant product arrangements.

Is an ERC the same as a mortgage exit fee?
No. An ERC relates to repaying early under the product terms. An exit or administration fee, if applicable, is a separate item; ask the lender to identify each component in writing.

Before making a repayment

Use the exact account details, amount and date when requesting a quote, and keep a copy of the lender’s response. If the mortgage is joint, being transferred, or being repaid as part of a sale or a new mortgage, make sure the parties handling the transaction have the same current figures. This helps avoid confusing a product’s headline terms with the amount actually required to settle the account.

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