When Remortgaging Pays Off
Remortgaging — switching your mortgage to a new lender or a new deal with your existing lender — is one of the most effective ways to reduce your monthly outgoings. Most UK mortgages are fixed for 2, 5, or 10 years, after which they revert to the lender's Standard Variable Rate (SVR), which is typically 2-4% higher. If you're on an SVR, you're almost certainly overpaying — and a remortgage could save you hundreds of pounds per month.
The math is simple: if your new rate is lower than your current rate, you save money every month. The question is whether the monthly saving is enough to cover the costs of switching (product fee, conveyancing, valuation) within a reasonable timeframe. This calculator shows you the break-even point — how many months it takes for the savings to pay off the fees — and the total lifetime saving over the remaining term.
When to Remortgage
- Your fixed rate is ending (start shopping 3-6 months before).
- You're on an SVR (you're almost certainly overpaying).
- Your property has increased in value (lower LTV = better rates).
- You want to overpay more than your current deal allows.
- You want to borrow more (for home improvements, not for spending).
The Costs of Remortgaging
The main cost is the product fee (also called an arrangement fee), which ranges from £0 to £2,000. Some deals are fee-free but have a slightly higher rate — these are often better for smaller mortgages. You may also need to pay for a valuation (though many deals include a free basic valuation) and legal fees (again, many deals include free legal work). Check what's included before comparing.
The break-even point is when your monthly savings equal the total cost of switching. If the break-even is under 12 months, remortgaging is almost always worth it. If it's 2-3 years, it depends on how long you plan to stay. If it's over 5 years, the deal probably isn't competitive enough.
Related Tools
- Mortgage Calculator — see the repayment on a new deal.
- Mortgage Comparison — compare multiple offers.
- Overpayment Calculator — pay off your mortgage faster.
Disclaimer: Finance Atlas is not regulated by the FCA. Estimates only, not financial advice. Always consult a qualified, FCA-regulated adviser.