You can remortgage to pay off debt while on a fixed rate, but you will normally pay an early repayment charge (ERC) of 1% to 5% of your mortgage balance, which on a £180,000 mortgage is £1,800 to £9,000. For most homeowners that charge outweighs the benefit, so the usual answer is to keep the fix and clear the debts with a secured loan, also called a homeowner loan or second charge mortgage, then remortgage everything when the deal ends. Paying the ERC usually only makes sense in the final year of the fix, when the charge has stepped down.
In most cases the early repayment charge costs more than a secured loan would over the same period, so keeping your fixed rate and adding a secured loan until the deal ends is the cheaper route. The exception is a small ERC in the last year of the fix, or a fixed rate so far above current pricing that remortgaging pays for itself.
- Early repayment charges on fixed rate mortgages are typically 1% to 5% of the balance repaid, often stepping down each year.
- The charge applies to the whole mortgage you repay, not just the extra borrowing for the debts.
- A secured loan sits behind your fixed rate mortgage and does not trigger the ERC, because your first mortgage stays in place.
- Most lenders let you apply up to six months before your fix ends, with an offer valid until the ERC expires.
- Secured loans can usually be repaid early with a much smaller charge, so they work well as a bridge to your deal end date.
- Checking your options will not affect your credit score.
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How lenders typically treat it
| What lenders look at | Typical position |
|---|---|
| Size of the early repayment charge | Commonly 1% to 5% of the balance being repaid, set out in your mortgage offer. Many five-year fixes step down (for example 5%, 4%, 3%, 2%, 1%); two-year fixes often charge 2% then 1%. |
| Time left on the fix | Under 12 months usually points to waiting or using a secured loan as a short bridge; more than two years usually rules out paying the ERC. |
| Adding the ERC to the new mortgage | Most remortgage lenders allow the ERC to be added to the loan if loan to value permits, but it then accrues interest for the whole term. |
| Maximum loan to value | Commonly 80% to 85% for debt consolidation, and the ERC counts towards it if added. |
| Secured loan while on a fix | Second charge lenders lend behind fixed rate mortgages routinely and only need your current lender's consent to register the charge, which is normally given. |
| Secured loan early repayment | Many secured loans carry a charge of one to two months' interest, or none after an initial period, so they can be cleared when you remortgage at the fix end. |
| Product transfer at the fix end | Staying with your lender on a new rate is usually possible without a full affordability check, and an existing secured loan does not prevent it. |
A general guide to how the market behaves, not a promise about any lender. Criteria change and every case is assessed individually. See the lender criteria database for named lenders.
What is an early repayment charge and how much is it?
An early repayment charge is the fee your lender charges if you repay all or a large part of a fixed rate mortgage before the deal ends. The exact figure is set out in your mortgage offer.
Illustrative rates: The rates in this example are fictional and used only to show how the numbers work. They are not an offer. Your actual rate may be lower or higher and will depend on your circumstances, your property and the lender. Consolidating debt over a longer term can mean you pay more interest overall, even if your monthly payment falls.
Most charges are a percentage of the balance repaid and many step down as the deal runs. A typical five-year fix might charge 5% in year one falling to 1% in year five; a two-year fix might charge 2% then 1%. On a £180,000 balance, 3% is £5,400, 2% is £3,600 and 1% is £1,800.
| Year of a five-year fix | Typical charge | On a £180,000 balance |
|---|---|---|
| Year 1 | 5% | £9,000 |
| Year 2 | 4% | £7,200 |
| Year 3 | 3% | £5,400 |
| Year 4 | 2% | £3,600 |
| Year 5 | 1% | £1,800 |
Two details are easy to miss. Most deals allow you to overpay up to 10% of the balance each year without any charge. And the charge usually ends on a fixed date rather than an anniversary of completion, so check the exact date in your offer; being a month early can cost thousands.
Can you remortgage to pay off debt while on a fixed rate?
Yes, nothing stops you applying, and lenders consider mid-fix applicants like anyone else. The difference is the cost. When you remortgage to a new lender you repay the existing mortgage in full, so the early repayment charge is calculated on the entire balance, not on the £20,000 or £30,000 of extra borrowing you actually wanted.
There is a second, quieter cost. If your fixed rate is lower than the rates available today, remortgaging early moves your whole balance onto a higher rate for the new term. That effect is often larger than the ERC itself, because it applies to the big number (the mortgage) rather than the small one (the debts). If your fix is higher than current pricing, the opposite is true and remortgaging early can pay for the charge and more.
Most lenders will let you add the ERC to the new mortgage rather than paying it in cash, subject to loan to value, but the charge then accrues interest for 20 years or more. If you ask your own lender for extra borrowing instead of moving, the ERC does not apply, but many lenders decline further borrowing for consolidation or offer it only on strict terms, and this site does not arrange it.
Whichever way you go, the new borrowing is secured on your home. Your home may be repossessed if you do not keep up repayments on the mortgage or on a secured loan. Free advice from MoneyHelper, StepChange or Citizens Advice comes first if the debts are unmanageable.
Pay the ERC and remortgage now, or keep the fix and add a secured loan?
Here is the decision in numbers. The homeowner has a £180,000 mortgage with two years left on the fix and a 3% ERC, and £20,000 of card and loan debt costing £532 a month. Route A pays the ERC and remortgages everything now. Route B keeps the fix and adds a secured loan for the £20,000.
Illustrative rates: The rates in this example are fictional and used only to show how the numbers work. They are not an offer. Your actual rate may be lower or higher and will depend on your circumstances, your property and the lender. Consolidating debt over a longer term can mean you pay more interest overall, even if your monthly payment falls.
| Position | Route A: pay the ERC and remortgage now | Route B: keep the fix, add a secured loan |
|---|---|---|
| Current monthly payments on the debts (cards £12,000 at 24.9%, personal loan £8,000 at 12.9%) | £532/month | £532/month |
| New monthly payment | £136/month for the £20,000 at 5.4% over 20 years, plus £37/month for the £5,400 ERC if added: £173/month | £190/month for the £20,000 at 7.9% over 15 years; the existing mortgage payment is unchanged |
| Total repayable over the new term | £32,748 on the £20,000, plus £8,842 on the ERC if added: £41,590 | £34,196 if run for the full 15 years; cleared at the fix end after about £3,049 of interest |
Over the two years until the fix ends, Route A costs the £5,400 charge plus roughly £2,100 of interest on the consolidated £20,000, about £7,500. Route B costs about £3,049 of secured loan interest and no charge, and leaves a balance of about £18,489 to fold into the remortgage when the fix ends. Route B is cheaper by more than £4,000 over the two years.
Route A wins only if the ERC is small, typically in the final year, or if your fixed rate is well above current pricing.
How do you time it around the deal end date?
Most lenders let you apply for a remortgage up to six months before the deal ends and hold the offer until then, so you can line up the new mortgage to complete on the first day no charge applies.
If the debts cannot wait, the secured loan route fits neatly around the date. The loan is set up now behind the existing mortgage, so the fix is untouched and no ERC is triggered. When the deal ends you have two choices. The first is to remortgage everything: the new lender repays the fixed rate mortgage and the secured loan on completion, leaving one payment. Secured loan early repayment charges are usually modest, commonly a month or two of interest and often nothing after an initial period, so clearing it after two years costs little; our guide on paying off a secured loan early has the detail.
The second choice is a product transfer plus the secured loan. You move onto a new rate with your existing lender, which usually needs no full affordability check and no new valuation, and leave the secured loan running alongside it. This suits people who want to avoid fresh underwriting or are happy with the secured loan's term; the loan can still be refinanced at the next deal end.
The one thing to avoid is remortgaging in the last few months of the fix while the ERC still applies. If the debts are costing £532 a month and the charge is £3,600, waiting four months costs around £2,100 in debt payments but saves the whole charge.
When is paying the early repayment charge actually worth it?
Paying the charge is a real option in a few situations. The first is a charge that has stepped down to 1%, or a fix with only a few months left where a secured loan's set-up costs would be paid for very little time. The second is a fixed rate well above what is available now, so the whole mortgage gets cheaper. The third is where a secured loan is not available at the amount you need, for example because your combined loan to value is already at the limit, but a remortgage lender will lend on the property's current value.
In every other case the arithmetic usually points the other way. A charge of 3% or more on a mortgage of typical size is several thousand pounds, and adding it to the loan means paying interest on it for decades. A secured loan over the same two years costs a fraction of that.
The test to apply is simple. Add up what you would pay over the months left on your fix under each route: the ERC and the interest on the new borrowing for Route A, the secured loan interest and fees for Route B. Then ask what happens to the main mortgage rate under each. If Route A is still cheaper after both steps, pay the charge. If not, keep the fix. An FCA authorised broker who arranges both first and second charge mortgages can put the two side by side for your real figures; our secured loan versus remortgage comparison covers the wider trade-offs.
What improves your chances
- Find the exact ERC percentage and end date in your mortgage offer before anyone runs numbers for you.
- Ask your lender for a redemption statement showing the current balance and the charge that would apply today.
- If you go the secured loan route, keep the first mortgage perfectly up to date; second charge lenders weight mortgage conduct heavily.
- Check combined loan to value after adding the debts and, for Route A, the ERC, against the 80% to 85% cap most lenders apply.
- Get your remortgage application started three to six months before the fix ends so it can complete on the first charge-free day.
- Compare the total cost of both routes over the months left on the fix, not just the monthly payment.
Alternatives worth considering
The main alternative to paying the ERC is the one this page describes: a secured loan behind your fixed rate mortgage, which our secured loans on a fixed rate page covers from the lender's side. For smaller amounts that you can clear within a couple of years, a 0% balance transfer card or an unsecured personal loan avoids both the charge and putting your home behind the debt. If your own lender will lend you more without moving, that avoids the ERC too, though many decline consolidation. And if the debts are unmanageable, a debt management plan through a free debt charity may be the more honest answer; our consolidation versus DMP comparison explains the difference.
Worried about debt? Get free advice first
If you're struggling, it's worth speaking to a free, impartial debt advice service before you borrow more. They don't sell anything and won't judge your situation.
- MoneyHelper: Free, impartial debt advice backed by government
- StepChange: The UK's largest free debt charity
- Citizens Advice: Free, confidential advice on debt and money
Checking your options with Equiclear will not affect your credit score.
Frequently asked questions
Can I remortgage to pay off debt while I am on a fixed rate?
Yes, but the early repayment charge on your existing mortgage applies to the whole balance you repay, typically 1% to 5%. For most people that makes a secured loan alongside the fixed rate cheaper until the deal ends, at which point everything can be remortgaged together.
How much is a typical early repayment charge?
Commonly between 1% and 5% of the balance repaid. Many five-year fixes step down by one percentage point a year, and two-year fixes often charge 2% then 1%. Your mortgage offer states the exact percentage and the date it ends.
Does a secured loan trigger the early repayment charge on my mortgage?
No. A secured loan is a separate second charge registered behind your existing mortgage, which stays exactly as it is. Your lender is asked for consent to register the charge, but you are not repaying the mortgage, so no ERC arises.
Can I add the early repayment charge to my new mortgage?
Usually, if the loan to value allows. Most remortgage lenders will add the charge to the advance so you do not pay it in cash. The drawback is that a £5,400 charge added to a 20-year mortgage costs considerably more than £5,400 by the end.
Can I remortgage before my fixed rate ends without paying the charge?
You can apply before it ends, usually up to six months ahead, and most lenders hold the offer so completion lands on or after the day the charge expires. You cannot complete early without paying it, unless your lender waives it as part of a product transfer.
Should I do a product transfer and keep the secured loan?
It is a sensible option if you would rather not go through full underwriting, or if the secured loan payment and term suit you. A product transfer gives you a new rate with your current lender, and the secured loan can be cleared or refinanced later.
Does checking my options affect my credit score?
No. Checking your options will not affect your credit score. Equiclear does not search your credit file, and any check the broker makes at this stage is a soft search, which other lenders cannot see. A full application for a remortgage or secured loan is recorded in the normal way.