What does ERC stand for?

Early Repayment Charge (ERC) is a fee imposed by lenders when borrowers repay their loans or mortgages earlier than the agreed-upon term. This charge is typically a percentage of the outstanding balance or a specific number of months' interest. The purpose of ERC is to compensate the lender for the loss of expected interest income due to the early repayment. It serves as a deterrent for borrowers who may consider refinancing or switching lenders before the loan or mortgage term is completed. However, it is essential for borrowers to carefully consider the potential ERC before making any early repayments to fully understand the financial implications.