Homebrew Need help with homebrewed Magic Surge mechanics

[Ulorian - Agent of Chaos]

I was thinking that could be reserved for subclasses and feats

The problem I see with that is you now have a feat tax whose purpose is to bring spellcasters back to the power level that they have in the base game. A power level that the base game ostensibly balances against non-spellcasters.

In other words, spellcasters under this system must either start a feat shy of non-spellcasters or take a particular subclass in order to maintain their 'effectiveness/power level' as compared to non-spellcasters.

What I liked about @TheHand 's suggestion is that it didn't reduce the base capabilities of spellcasters; it instead added an option to gain a boon in exchange for a penalty.

Another option you might consider is to look at a system where spellcasting dangers like this are baked in. WFRP springs to mind. This way, you don't have to worry about trying to balance D&D against the flavour you're trying to inject. It does involve switching systems, which might not be appealing to you though.

 

[Distracted DM]

My first suggestion: just use the wild magic sorcerer's wild magic for every caster, or every arcane caster, whatever. Yes it neuters one subclass of one class, just remove that subclass if you don't want to redesign it (you could make them better at controlling surges of you wanted to keep them).
The wild magic sorcerer 5e table is overall beneficial, and it doesn't come up every spellcast, but it's dangerous enough that it would affect the treatment of magic in the world. I know, because I did something similar.

However I did want to provide players with an opt-out, I made an organization based on the Dragonlance tower of sorcery that the PCs could join that basically makes it so they don't have wild magic chances.