In many cases lenders will protect their interests by attaching early repayment charges to the initial period of a mortgage, either in line with an initial fixed or discounted rate, for example, or beyond the initial rate (known as overhang): these may be charged in a number of different situations. The lender would almost always set an early repayment charge if you change to a different lender within the early repayment period set within the mortgage offer. They might also charge you if you move house or pay the mortgage off in full.
It is of the utmost importance to consider what the early repayment charges may be when deciding which mortgage product suits your situation: if you need to keep your options open with regard to moving house, or shopping around for better deals, then a product with no early repayment charges would be advantageous. On the other hand, if you have no plans to change lender in the immediate future, and wish, for example, to fix your monthly payment, then an early repayment charge may not matter to you at all.
Early repayment charges are generally worked out as a percentage of the outstanding balance, and will vary widely from lender to lender. One of our responsibilities is to ensure that you are fully aware of all penalties that you may be charged before you make any final decision as to what product best suits your needs.