Mortgage question
Should I break my fix early if rates have dropped?
Breaking a UK fix early is rarely worth it in April 2026. The typical Early Repayment Charge (ERC) of 3-5% on your outstanding balance usually exceeds the interest saving from moving to a lower rate with 1-2 years still left on the fix. The simple break-even test: take the ERC plus any new product and valuation fees, divide by your monthly saving, and if the answer is more than the months you have left on the fix, stay put. Almost every time, the arithmetic says stay.
How does the ERC actually get calculated?
Most UK fixed-rate mortgages use a stepped ERC schedule that reduces each year of the fix:
| Year of fix | Typical ERC (% of outstanding balance) |
|---|---|
| Year 1 | 5% |
| Year 2 | 4% |
| Year 3 | 3% |
| Year 4 | 2% |
| Year 5 | 1% |
On a 2-year fix the schedule is usually 2% then 1%. The percentage applies to the balance on the day you redeem — not the original loan, so a few years of overpayments will shrink the cash amount.
Quick calculation: £200,000 balance, 2 years into a 5-year fix, 3% ERC = £6,000.
The break-even formula, worked
The test is straightforward:
(ERC + new product fees + valuation + legal costs) ÷ monthly saving from the new rate = months to break even
Worked example for April 2026:
- Current fix: 5.50%, 5-year term, 3 years left, £200,000 balance
- Your monthly payment: roughly £1,228 (on a 25-year term)
- New rate available: 5.00%
- New monthly payment: £1,169
- Monthly saving: £59
- ERC at 3%: £6,000
- New product fee: £999
- Valuation: £0 (free on most remortgages)
- Solicitor: £0 (free legals included)
- Total cost to switch: £6,999
- Months to break even: £6,999 / £59 = 118 months (9.8 years)
You’ve only got 3 years (36 months) left on the fix. So on these numbers, staying saves £4,876 over the remaining fix period. That’s the honest answer on most fixes in 2026 — the ERC nearly always swamps the gain.
When does breaking the fix actually make sense?
Three narrow scenarios:
- You’re in the last 6 months of a fix with a tiny ERC (1%) and rates are meaningfully lower. On £200k that’s a £2,000 ERC — sometimes recoverable within 2 years of the new fix.
- You need to move house and your mortgage isn’t portable. If porting isn’t available, the ERC is unavoidable anyway, so check whether switching lender altogether at the new property is cheaper net of the ERC.
- Your life has changed and you need to raise capital. Divorce, inheritance buy-outs or home improvements can force the question — at which point you’re comparing breaking early against a further advance at 6%+. Sometimes the ERC is the lesser evil.
Use our remortgage calculator to stress-test the numbers with your actual balance.
What about porting?
Most UK residential fixes are portable — you can move the existing mortgage and rate to a new property, avoiding the ERC, provided the new property passes the lender’s valuation and you pass a fresh affordability check. This is the normal way out when you’re moving house during a fix. Gotchas:
- Porting isn’t guaranteed. If the lender declines the new application, you pay the ERC.
- Porting usually happens same-day — you redeem on the old property and take out a “new” mortgage on the same terms on the new one.
- If you need to borrow more, you’ll have a blended rate: existing balance on the old fix, extra borrowing on a new product.
What if I just overpay instead?
Overpayments within the 10% annual allowance incur no ERC and reduce interest immediately — that’s almost always the highest-value move while locked in a fix. See what is the 10% overpayment rule for the mechanics. A £20,000 lump sum on a £200,000 mortgage at 5.50% saves roughly £4,400 over 3 years of the remaining fix with zero cost or paperwork — far better than the break-early arithmetic.
The misconception worth clearing up
“My lender will waive the ERC because they want to keep my business.” They almost never will. The ERC funds the hedging contract the lender took out against your fix, so waiving it costs them real money. The only common exception is a “transfer of equity” on divorce, where some lenders pro-rata the ERC. Don’t plan around goodwill — plan around the schedule in your offer letter.
This is information, not regulated advice — the break-even arithmetic is personal to your balance, product and remaining term. A broker can run it with you properly.
Sources
Information, not regulated advice. Mortgage Notes is not an FCA-authorised mortgage adviser. For a recommendation on your specific circumstances, speak to an FCA-authorised broker.