How it works
When to remortgage
Remortgaging means switching your existing mortgage to a new deal — either with your current lender (known as a product transfer) or with a new lender. The most common reason is that your initial fixed or tracker rate has ended and you have been moved onto the lender's Standard Variable Rate (SVR), which is typically 2–3 percentage points above the Bank of England base rate.
In mid-2026, average SVRs were around 7.0–7.5% — significantly higher than available fixed rates of 4.0–4.8%. For a £200,000 repayment mortgage on a 25-year term, that gap translates to roughly £250–£400/month in unnecessary extra payment.
Other good reasons to remortgage include: your home has risen in value (improving your LTV band), you need to release equity for home improvements, or you want to consolidate debts. Use our LTV calculator to check whether rising house prices have moved you into a better rate tier.
The best time to start the remortgage process is three to six months before your current deal ends — this gives you time to compare deals, submit an application and avoid rolling onto the SVR.
How the savings calculation works
The remortgage saving calculation has three components: (1) the monthly payment difference, (2) the total saving over the deal term, and (3) the break-even point after accounting for costs.
Monthly saving = current monthly payment − new monthly payment. Use our mortgage repayment calculator to calculate both figures precisely at your outstanding balance and remaining term.
Total saving over term = monthly saving × number of months in the new deal. A two-year fix saves over 24 months; a five-year fix saves over 60 months.
Break-even calculation: if your total costs (ERC + arrangement fee + legal fees) are £3,000 and you save £300/month, your break-even point is 10 months. After that, every month is a saving.
| Scenario | Rate | Monthly payment | vs SVR at 7.5% | Total saving (5yr) |
|---|---|---|---|---|
| Current SVR | 7.50% | £1,612 | — | — |
| 2-year fix | 4.20% | £1,237 | −£375/month | £9,000 (2yr) |
| 5-year fix | 4.40% | £1,262 | −£350/month | £21,000 (5yr) |
| 10-year fix | 4.65% | £1,298 | −£314/month | £37,680 (10yr) |
Costs: early repayment charges and fees
Before remortgaging, you must account for the costs. The two main ones are the Early Repayment Charge (ERC) and the arrangement/legal fees.
An ERC is a penalty charged by your lender if you exit your mortgage deal before it ends. Typical ERCs are 1–5% of the outstanding balance, declining over the deal term. On a £200,000 mortgage with a 3% ERC, that is £6,000 — which could wipe out the first year of savings from a better rate.
ERCs are usually structured as: year 1: 5%, year 2: 4%, year 3: 3%, year 4: 2%, year 5: 1% (on a five-year fix). Once the deal ends, there is no ERC and you are free to switch without penalty.
Arrangement fees on new mortgages typically run £500–£1,500. Some lenders charge no fee but offset this with a slightly higher rate. Legal fees for a remortgage (solicitor/conveyancer) typically cost £300–£700, though some lenders offer free legals as an incentive. Total costs therefore typically fall in the range of £1,000–£3,000 excluding any ERC.
Remortgage costs checklist
- Early Repayment Charge (ERC) — 1–5% of outstanding balance if within deal period
- Arrangement/product fee — typically £0–£1,500 (can be added to mortgage)
- Valuation fee — £0–£500 (many lenders offer free valuations)
- Legal/conveyancing fees — £300–£700 (many lenders offer free legals)
- Mortgage broker fee — £0–£500 (many brokers are fee-free, paid by lender)
- Deeds release fee from existing lender — typically £50–£300
Fixed vs variable: which is right in 2026?
The choice between fixed and variable rate is a judgment call about where rates are heading and how much certainty you need. In 2026, with the Bank of England base rate at 4.25% and markets pricing in further gradual cuts, the fixed vs tracker decision is finely balanced.
A two-year fix gives you certainty now, but means you will remortgage again in 2028 — when rates could be higher or lower. Two-year fixes were priced around 4.2–4.6% in mid-2026.
A five-year fix locks in your rate until 2031. Five-year fixes were priced at 4.0–4.5%, offering more certainty. The trade-off is a higher ERC if you need to move or release equity within that period.
A tracker mortgage follows the Bank of England base rate plus a margin (e.g., base + 0.5%). If rates fall, your payment falls automatically. Trackers typically carry no ERC, giving you flexibility to fix if rates rise unexpectedly.
For most homeowners in 2026 prioritising stability, a five-year fix at 4.0–4.4% offers the best balance of rate certainty and competitive pricing.
| Product type | Typical rate | Certainty | ERC | Best for |
|---|---|---|---|---|
| 2-year fixed | 4.20–4.60% | High (2yr) | 2–3% | Those expecting to move or rates to fall |
| 5-year fixed | 4.00–4.50% | High (5yr) | 3–5% | Stability seekers, families |
| 10-year fixed | 4.50–5.00% | Very high | 3–5% | Long-term certainty, older borrowers |
| Tracker (no ERC) | Base +0.5–1% | Low | None | Those expecting rate cuts |
| SVR (do nothing) | 7.00–7.50% | Low (can change) | None | Nobody — almost always the worst value |
Step-by-step remortgage process
Remortgaging is simpler than buying a home — there is no property chain and you already own the asset. The process typically takes four to eight weeks from application to completion.
The remortgage process step by step
- Step 1: Check your current deal — note your end date, outstanding balance, remaining term and any ERC.
- Step 2: Check your credit file — use Experian, Equifax or TransUnion. Correct any errors before applying.
- Step 3: Get an updated property valuation — most lenders do a free desktop valuation. Rising prices may have improved your LTV.
- Step 4: Compare deals — use a whole-of-market broker or comparison site. Compare the total cost over the deal term (rate + fee), not just the headline rate.
- Step 5: Submit an application — gather payslips, bank statements, P60 and ID. Employed applications are usually straightforward.
- Step 6: Valuation and legal checks — the new lender instructs a valuer and solicitor. Many lenders cover these costs.
- Step 7: Receive your mortgage offer — review the terms carefully, especially the ERC schedule.
- Step 8: Completion — your new lender pays off your old mortgage and your new deal begins.
When remortgaging does not make sense
Remortgaging is not always the right move. There are several scenarios where staying put — or doing a product transfer with your existing lender — is the better option.
If you have a large ERC, the penalty may outweigh the rate saving. Always calculate the break-even point: total costs ÷ monthly saving = months to break even. If break-even is longer than your new deal term, remortgaging costs more than it saves.
If your mortgage balance is very small (under £50,000), the arrangement fees may represent a high percentage of the loan. At £50,000, a £1,500 fee is 3% of the balance — equivalent to a 3% ERC in its own right.
If your financial circumstances have changed — reduced income, new CCJ, high debt-to-income — you may not pass a new lender's affordability assessment. In this case, a product transfer with your existing lender (which typically involves lighter credit checks) may be the only viable route.
If you are very close to paying off your mortgage (less than two to three years remaining), the interest savings from a better rate are modest and the fees may not be worth it.