What is remortgaging and why should I do it?

Remortgaging means switching to a new mortgage deal to get a lower rate when your current fixed or tracker deal expires. Most homeowners should remortgage every 2–5 years to avoid expensive SVR rates.

What is an early repayment charge (ERC)?

An ERC is a penalty (typically 1–5% of the outstanding balance) for leaving your mortgage during the initial deal period. No ERC applies once your deal expires.

Should I fix for 2 years or 5 years when remortgaging?

2-year fixes allow you to remortgage sooner if rates fall; 5-year fixes offer certainty and often a lower rate. Choice depends on your rate outlook and need for flexibility.

Can I remortgage to release equity?

Yes. If your home has risen in value or your mortgage balance has reduced, you can remortgage for a larger amount and take cash from the equity, subject to affordability checks.

Remortgage Calculator

Compare your current mortgage deal with a new rate. Calculate your monthly saving, total interest saved, switching costs, and break-even point before you remortgage.

Current Deal

Outstanding Balance

Current Interest Rate

Remaining Term

yrs

New Deal

New Interest Rate

New Term

yrs

Monthly Saving

£315 saved

£1,581/mo → £1,265/mo · Recommend remortgaging

Current Monthly

£1,581

New Monthly

£1,265

Switching Costs

£3,299

Break-Even

11 months (0.9 yrs)

Net Saving Over Term

£72,410 saved

Rate Reduction

2.75%

How to Use This Remortgage Calculator

Enter your Current Deal details (balance, rate, remaining term) and the New Deal you're considering. Click "More options" to add all switching costs — exit fees, arrangement fees, valuation, and legal fees — for an accurate break-even and net saving calculation.

Understanding Break-Even

The break-even point is how many months it takes for your monthly savings to recover the total switching costs. If break-even is less than your remaining term, remortgaging is financially beneficial.

When to Remortgage

The ideal time to remortgage is 3–6 months before your current deal expires. This gives enough time to arrange the new deal while avoiding a gap on SVR. If you're already on SVR, remortgage as soon as possible — SVR rates are typically 2–3% higher than competitive deals.

Costs to Factor In

Early Repayment Charge (ERC): Usually 1–5% of the outstanding balance. Check your mortgage offer document.
Arrangement fee: £0–£2,000 depending on the product. Can often be added to the loan.
Valuation: Often free with remortgage products, otherwise £150–£500.
Legal fees: Many remortgages include free legal work. Otherwise budget £300–£800.

Remortgage Saving Formula

Monthly Saving = Current Monthly Payment − New Monthly Payment

Break-Even (months) = Total Switching Costs / Monthly Saving

Net Saving Over Term = (Current Monthly × Remaining Months)
− (New Monthly × Remaining Months)
− Total Switching Costs

Example: Remortgaging in London

David's SVR Escape

David's 2-year fixed deal expired 6 months ago. He's been paying his lender's SVR of 7.49%. He remortgages to a new 5-year fix at 4.35%.

Mortgage Balance	£285,000
Current Rate (SVR)	7.49%
Current Monthly	£2,107
New Rate (5-yr fix)	4.35%
New Monthly	£1,603
Monthly Saving	£504/month
Switching Costs	£1,799 (arrangement + legal)
Break-Even	3.6 months
Net Saving (19yr term)	£112,660

With no ERC (he was already on SVR) and a quick break-even of less than 4 months, remortgaging makes overwhelming financial sense for David. The longer he delayed, the more money he wasted on SVR.

Frequently Asked Questions

Remortgaging means switching your existing mortgage to a new deal — either with your current lender (a product transfer) or a new lender. The main reasons to remortgage are: to get a lower interest rate when your current deal expires, to release equity, to change the mortgage type, or to consolidate debt. Most homeowners should remortgage every 2–5 years when their fixed or tracker deal ends.

An ERC is a penalty you pay for leaving your mortgage during the initial deal period (e.g., during a 2-year fix). ERCs are typically 1–5% of the outstanding balance. On a £200,000 mortgage with a 3% ERC, that's £6,000. ERCs usually reduce each year of the deal — for example, 3% in year 1, 2% in year 2, 1% in year 3. You won't pay an ERC if you switch after your deal expires.

This depends on your view of future interest rates and your personal flexibility needs. A 2-year fix gives you the chance to remortgage sooner if rates fall, but you'll face the remortgage process again more quickly and may pay a higher rate than a 5-year deal. A 5-year fix provides payment certainty and often a lower rate, but you're locked in for longer. Many financial advisers suggest 5-year fixes during periods of high uncertainty.

Yes. If your home has increased in value or you've paid down your mortgage, you may have equity you can release by borrowing more. For example, if your home is worth £400,000 and your mortgage is £200,000, you have £200,000 equity. You could remortgage for £250,000 and release £50,000 in cash (subject to affordability). The additional borrowing increases your monthly payments and total interest — use the calculator to see the impact.