Your home may be repossessed if you do not keep up repayments on your mortgage. Even when remortgaging to lower costs, the new deal creates a new financial commitment you must be able to maintain.
Quick answer
Remortgaging to a lower rate is the most common reason UK borrowers switch lenders. The saving can be substantial, particularly on larger balances. The key financial discipline is to compare the total cost over the full deal period - including arrangement fees, legal costs, and any ERC on the outgoing mortgage - against the total interest saved. Always do this calculation on paper before applying anywhere.
Mortgage advice note: This page provides general information only. For personalised advice, speak to an FCA-authorised mortgage adviser who can assess your individual circumstances.
How to Calculate Whether Switching Saves Money
- Calculate your current monthly payment and total interest remaining at your current rate over the next deal period
- Calculate the monthly payment and total interest at the proposed new rate over the same period
- Subtract the total cost of switching: arrangement fee (if any), legal fees if not provided free, broker fee if applicable, and any ERC on your current mortgage
- If the net saving is positive, switching is financially beneficial - provided you are confident in maintaining the new commitment
Your LTV and the Rate You Can Get
Mortgage rates improve as your loan-to-value falls. If you have been in your home for several years and property prices have risen or your balance has reduced (or both), your LTV may now be in a lower band than when you last arranged your mortgage. This can make the saving from remortgaging even larger. Check which LTV band applies to you before comparing rates.
Timing Your Remortgage
Start the process 3 to 6 months before your current deal ends. This allows time to compare, apply, and complete without a gap that sees you defaulting onto your lender's SVR. Many lenders allow you to secure a rate now with completion timed to coincide with your ERC expiry date - this is worth exploring with a broker.
Should You Use a Broker?
Using a whole-of-market broker gives you access to a broader range of deals than going direct. They can also handle the application process on your behalf and advise on which lender is most likely to approve your specific situation. Some broker fees are charged directly to you; others are covered by lender commission. Ask upfront how your broker is paid.
Frequently Asked Questions
The saving depends on how much higher your current rate is compared to the best available rate for your LTV. As a rough illustration: a £200,000 mortgage on a 20-year term at 6% costs approximately £1,433 per month. At 5%, the payment falls to around £1,320 - a saving of about £113 per month, or over £1,350 per year. Multiply this effect for larger balances or bigger rate differences. Use a mortgage comparison calculator to model your specific scenario accurately.
It depends on the size of your mortgage and how much lower the rate is on the fee-paying product. A £2,000 arrangement fee added to a large mortgage (£300,000+) can often be offset by a meaningfully lower rate within a year or two. On a smaller balance, a no-fee product at a slightly higher rate may cost less overall. Always calculate the total cost over the full fixed period for each option, not just the monthly payment.
If you have significant early repayment charges remaining, remortgaging before your deal ends typically makes no sense unless your rate is dramatically higher than what You could get. Start looking 3 to 6 months before your ERC period ends. Many lenders allow you to lock in a new rate now with completion timed for when your ERC period expires - this lets you secure a current pricing without paying the charge.
Yes. Extending the remaining mortgage term lowers the monthly payment by spreading the balance over more years. However, you pay more total interest as a result. For borrowers in temporary financial difficulty, extending the term while rates ease can provide breathing room. For those approaching retirement, extending beyond your planned retirement age requires consideration of your post-retirement income. Model both the monthly saving and the total additional interest cost before deciding.
Most lenders will conduct some form of valuation - often a desktop or automated valuation model (AVM) for a straightforward like-for-like remortgage with no additional borrowing. If you are releasing equity or if your property type is unusual, a physical valuation by a surveyor may be required. Many remortgage products offer a free standard valuation as part of the package.
Disclosure
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