The decision to break a fixed rate mortgage early is one of the more financially complex judgements homeowners face, because it requires comparing a certain cost (the early repayment charge) against an uncertain saving (the lower interest payments, which depend on what rate is available when the deal expires). At current rate levels, where small differences in percentage points translate into large differences in monthly payments on typical mortgage balances, getting this decision right can be worth several thousand pounds.
This calculator models two approaches to the timing question: breaking the deal now and paying the ERC to lock in a lower rate, versus waiting until the deal ends and remortgaging at whatever rate is available then. For homeowners who also need to borrow additional money for home improvements, it adds a third option: keeping the existing deal and taking a second charge mortgage for the new borrowing, avoiding the ERC entirely. All figures are illustrative. This is not mortgage advice. Squared Money is an introducer for secured loans, not a mortgage broker. For mortgage decisions, speak to a regulated whole-of-market mortgage broker.
At a Glance
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The break-even period is the most important output. ERC divided by the monthly interest saving gives the number of months it takes to recover the penalty. If the remaining months on the deal exceed that number, breaking early saves money.
Enter the outstanding balance, current fixed rate, months remaining on the deal, the ERC percentage, and the new rate available now. The calculator returns the break-even period in months and the net saving or cost over the remaining deal period and beyond. ERCs typically reduce each year of the fixed term, so a borrower in the final year of a five-year fix may face only 1% rather than 5%, which can make breaking early straightforwardly worthwhile even with a modest rate improvement.
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The future rate assumption changes the answer completely. No one can predict where rates will be when the deal ends, so the tool lets you test multiple scenarios rather than committing to a single guess.
If rates fall before the deal expires, waiting may produce a better outcome than breaking early: the borrower avoids the ERC and remortgages onto a lower rate than is available today. If rates stay flat or rise, breaking now locks in the current rate and the saving compounds for the full remaining mortgage term. Adjusting the “rate expected at deal end” slider between a higher, same, and lower value shows the range of outcomes rather than false precision. Rate reservation, where available, lets borrowers lock in a rate up to six months ahead without paying the ERC until the deal actually ends.
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If additional borrowing is also needed, a second charge mortgage avoids the ERC entirely. This is the option most people do not know about.
Rather than breaking the existing deal to remortgage at a higher balance, a second charge sits behind the first mortgage and funds the new borrowing without triggering the ERC. The second charge rate is typically 1% to 3% higher than a first charge rate, but the absence of the ERC can offset this, particularly where the charge is 2% or more and the additional borrowing is modest relative to the total balance. Toggle the additional borrowing section in the calculator to see the three-way cost comparison: wait, break now, or keep the deal and take a second charge.
Remortgage timing calculator
Compare the total cost of breaking your fixed rate now against waiting until the deal ends, including the second charge alternative for additional borrowing. All figures are illustrative. This is not mortgage advice.
Your current mortgage
Check your mortgage offer or contact your lender for your exact ERC. This is usually a percentage of the outstanding balance.
Remortgage rate scenarios
No one can predict future rates. Try several values: higher, same as now, and lower.
Additional borrowing details
A second charge mortgage sits behind the first mortgage and funds the new borrowing without breaking the existing deal. There is no ERC on the first mortgage. The second charge rate is typically higher than a first charge mortgage rate and lower than unsecured loan rates. Use the second charge vs further advance comparator for a detailed comparison.
The Three Decisions This Calculator Models
Option 1
Wait until the deal ends
Continue paying the current fixed rate until the deal expires, then remortgage at whatever rate is available at that point. No ERC. The risk is that rates move upward before your deal ends, reducing or eliminating any saving from waiting. The benefit is that if rates fall further before your deal ends, you access a better rate than is available today. The expected rate at deal end is unknown: the calculator lets you test several assumptions.
Option 2
Break the deal now and remortgage
Pay the early repayment charge and immediately remortgage onto the new rate. The ERC is a certain cost; the saving is immediate and continues for the full remaining mortgage term. The case for breaking early is strongest when the ERC is small relative to the monthly interest saving and there are many months remaining on the deal. The break-even period (ERC divided by monthly saving) is the key metric: if it is shorter than the remaining months, breaking early pays off within the current deal period.
Option 3
Keep the existing deal and take a second charge
If additional borrowing is needed alongside the remortgage consideration, a second charge mortgage sits behind the first mortgage and funds the new borrowing without triggering the ERC. The first mortgage continues at its current rate. The second charge rate is typically higher than a first charge rate, but the absence of an ERC may make the total cost competitive with breaking the existing deal. This option is only relevant when additional borrowing is required alongside the remortgage decision.
The future rate problem
Why the expected rate at deal end changes everything
The case for waiting depends entirely on what rate will be available when the deal ends. If rates fall between now and your deal end date, waiting may produce a better outcome than breaking early. If rates rise or stay flat, breaking now locks in a rate that becomes progressively more advantageous. No one can predict this reliably. The calculator lets you test multiple future rate assumptions to understand the range of outcomes rather than committing to a single scenario.
When Is a Second Charge the Right Approach?
A second charge mortgage becomes the most financially efficient option when two conditions apply simultaneously: the existing first mortgage has a significant ERC that makes breaking expensive, and new borrowing is required for a specific purpose such as home improvements. In this scenario, a second charge allows the borrower to access the new funds at a competitive rate without incurring the ERC cost to unlock a remortgage.
The comparison is not always straightforward. A second charge rate is typically 1% to 3% higher than a comparable first charge mortgage rate, which means the additional borrowing costs more than it would on a remortgage. But the absence of the ERC may offset this additional cost, particularly where the ERC is large (2% or more) and the new borrowing is modest relative to the total mortgage balance. The calculator above shows the total cost of each approach over the remaining deal period and beyond, so the net position is visible rather than requiring mental arithmetic. For a more detailed comparison of second charge versus further advance options, the second charge vs further advance comparator in the secured loans tools section covers the full picture.
Related Tools and Guides
Tool
Second charge vs further advance comparator
Compares the cost of a second charge mortgage against a further advance from the existing lender for additional borrowing. Use alongside this timing calculator for a complete picture of the additional borrowing decision.
Tool
Models the available equity and loan-to-value ratio for a secured borrowing decision. Relevant if the additional borrowing amount in this calculator is approaching the limits of what your equity position can support.
Tool
Green mortgage EPC saving calculator
If EPC improvements are being funded alongside the remortgage, use this calculator to model whether completing works before the remortgage date unlocks a green mortgage rate reduction that changes the comparison.
Guide
Covers the full decision framework between remortgaging and taking a secured loan for additional borrowing, including when each approach is typically more cost-effective and what criteria lenders apply to each.
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Checking won’t harm your credit scoreFrequently Asked Questions
How do I find out the exact ERC on my mortgage?
Your early repayment charge is set out in your mortgage offer document, which you would have received when your current deal was arranged. It is usually expressed as a percentage of the outstanding balance at the time of repayment, and typically decreases each year of the fixed period: a 5-year fix might carry a 5% ERC in year one, 4% in year two, and so on down to 1% in year five. Your lender can also provide the current ERC figure on request, either by phone or through your online account. Some lenders also specify a minimum ERC, so even if the percentage is low, there may be a minimum charge of several hundred pounds.
The ERC applies only if you repay the mortgage or switch to a new deal during the fixed term. It does not apply to regular overpayments within the lender’s permitted overpayment allowance, which is typically 10% of the outstanding balance per year. Overpaying within this allowance reduces the balance on which the ERC would be calculated if you later choose to remortgage, which slightly reduces the ERC cost.
Can I lock in a new rate now but not complete the remortgage until my deal ends?
Yes, in most cases. Many lenders and mortgage brokers offer a rate reservation service that allows you to agree to a new mortgage rate up to three to six months before you want to complete. This means you can secure the current rate without having to break the existing deal early and pay the ERC. The reservation typically expires at a set date: if you miss the completion deadline, the rate reservation lapses and you would need to apply again at the prevailing rate.
Rate reservation is particularly useful when rates are low and you want to lock in before they move upward, but your current deal has several months to run. A mortgage broker can arrange this for you and will confirm the reservation terms and completion deadline. The completion of the new mortgage would be timed to coincide with your current deal ending, avoiding both the ERC and any gap period between deals where you would revert to the lender’s standard variable rate.
What is a standard variable rate and how does it affect the comparison?
The standard variable rate (SVR) is the rate your mortgage reverts to when a fixed or tracker deal ends, if you do not arrange a new product. SVRs are set by the lender and can change at any time: they are typically 2% to 4% above the Bank of England base rate and are usually significantly higher than available fixed or tracker rates. Staying on an SVR even briefly after a deal ends is expensive and is rarely the right choice.
In the context of this calculator, the “rate expected at deal end” should be the rate you expect to be able to fix to, not the SVR. If you have not arranged a new deal before your current one ends, you will automatically revert to the SVR, which would be considerably worse than either the “break now” or “wait and remortgage” scenarios modelled here. The practical implication is that remortgage planning should begin at least three months before the deal end date to allow enough time to arrange a new product before the SVR applies.
Does the comparison change if I want to borrow less on the new mortgage?
Yes. If the remortgage involves a lower balance than the current mortgage (for example, because you want to pay down some capital alongside remortgaging), the monthly interest saving is smaller because the balance is smaller. This extends the break-even period. The calculator models the comparison on the current balance: if you plan to repay some capital as part of the remortgage, reduce the outstanding balance input to reflect the amount you intend to carry forward, and use that lower figure for the comparison.
For the additional borrowing comparison, the total balance increases, which increases the monthly cost of the break-and-remortgage option but may reduce the effective rate on the new borrowing compared with a second charge. The calculator models both the break-now-and-borrow and the second-charge options when the additional borrowing toggle is on, so you can compare the total monthly payment and total interest cost directly. Where the additional borrowing amount is large relative to the existing balance, the rate saving from including it in a remortgage may outweigh the ERC cost even if the basic break-even analysis on the existing balance alone does not favour breaking early.
Squaring Up
The remortgage timing question has a clean financial answer once the break-even period is calculated: if the ERC divided by the monthly interest saving produces a number smaller than the remaining months on the deal, breaking early recovers the ERC cost within the current deal period and produces a net saving from day one of the new deal onwards. Where it does not, the case for breaking depends on what rate is expected at deal end. Using the future rate slider to test scenarios rather than assuming a single rate gives a range of outcomes rather than false precision.
The second charge option is the least well-known of the three approaches and is worth understanding if additional borrowing is part of the picture. It is not always the right choice: the higher rate on the second charge can outweigh the ERC saving depending on the amounts involved, but it is frequently overlooked as an option. The three-way comparison in this calculator makes the total cost of each approach visible so the decision is made on numbers rather than familiarity with whichever product is most commonly discussed.
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Checking won’t harm your credit score Check eligibilityThis tool is for illustrative purposes only and does not constitute financial or mortgage advice. Squared Money is an introducer for secured loans and is not a mortgage broker or lender. All interest calculations are approximate and do not account for compounding or changes in the outstanding balance over time. Early repayment charge figures are illustrative: your actual ERC is set by your lender and should be verified before making any decision. Future mortgage rates are unknown and cannot be forecast. Always seek independent mortgage advice from a whole-of-market broker authorised and regulated by the FCA before making a remortgage decision. Your home may be at risk if you do not keep up repayments on a mortgage or secured loan.
