Estimating an early repayment charge

If you repay a lifetime mortgage early, outside of the normal exemptions, the lender may apply an early repayment charge. Some plans use a fixed reducing scale that falls to zero after a set number of years. Others are gilt-linked, where the charge moves with gilt yields and cannot be known in advance. This tool estimates both.

Estimated early repayment charge

£5,000

Charge breakdown
Item	Amount

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Richard's view

This is the part of equity release people regret most, so read it carefully. A fixed scale like the one above is predictable, and after the scale ends you can repay with no charge at all. A gilt-linked charge is different: it can be nothing if gilt yields have risen since you took the plan, or it can be tens of thousands if yields have fallen. You genuinely cannot calculate it precisely yourself, which is why the gilt estimate here is shown as a wide range. Most plans also let you repay up to about 10% a year with no charge, and charges usually fall away if you move to care or on death of the last borrower. Always check your own offer document and ask your adviser for an exact figure before acting. These numbers are illustrative only.

Richard Parker, Equity release and later life lending adviser