Remortgage Calculator
Updated: April 2025 for 2025/26 tax year | Data sources: HMRC, ONS, Bank of England
Determine if remortgaging will save you money with our break-even analysis.
When Should You Remortgage?
Remortgaging—switching to a new mortgage with a different lender or product—can save significant money if rates have fallen or your circumstances have improved. However, remortgaging involves costs (Early Repayment Charges, arrangement fees, legal costs) that eat into savings. Understanding the break-even point is crucial: you need to know how long it takes for monthly savings to exceed upfront costs.
Understanding Early Repayment Charges
If you're in a fixed-rate mortgage period before the end date, exiting early triggers an Early Repayment Charge (ERC), typically 1-5% of the outstanding balance. Some mortgages use tiered charges (3% year one, 2% year two, etc.). If your fixed rate ends soon, you might wait rather than pay the ERC. Always check your mortgage terms: ERCs vary dramatically. Tracker and variable mortgages often have no ERC, making remortgaging cheaper.
Arrangement Fees and Other Costs
New mortgages usually include arrangement fees (£500-£2,000+), paid upfront or added to the mortgage balance. You'll also face legal fees (£200-£500), valuation fees (£200-£1,500), and possibly surveyor fees. Some lenders offer fee-free mortgages, offsetting this cost. When calculating if remortgaging saves money, add all costs: ERC + arrangement fee + valuation + legal = total remortgage cost. Monthly savings must overcome this before you benefit.
Rate Changes and the Bank of England
Remortgaging makes most sense when interest rates have fallen. If base rates have dropped 1%+ and you're on a 5-year fixed at a high rate, remortgaging likely saves money. Conversely, if rates are rising, rushing to remortgage (if your rate is due to expire soon) locks in higher rates. Check Bank of England base rate trends and lender mortgage rates before deciding. Often, remortgaging is most valuable 6 months before your current deal ends.
Fixed vs Tracker Mortgages
Fixed-rate mortgages have rate certainty and often strict ERCs. Tracker mortgages follow base rates, offering no certainty but lower ERCs. If you're on a tracker at 1-2% above base and base rates rise, consider fixing to lock in protection. If you're on a high fixed rate and base rates have fallen, remortgaging to a lower fixed often makes sense. Evaluate your risk tolerance alongside the math.
Life Circumstances and Flexibility
Beyond pure numbers, consider flexibility. If you plan to move within 2-3 years, remortgaging might not be worth it—you'll pay costs only to sell soon. If you're staying long-term, break-even at 18-24 months is excellent. If your income has improved significantly, remortgaging might access better rates (lower LTV, better credit profile). Consider the broader picture, not just rate savings.
Break-Even Analysis Explained
This calculator shows your break-even point: the number of months until monthly savings exceed upfront costs. If remortgaging costs £2,500 and saves £200/month, break-even is 12.5 months. If your fixed rate expires in 10 months, waiting might make more sense. If you plan to stay 20+ years, even a 20-month break-even is excellent. Use this insight alongside your own plans.
Remortgaging is worth it if: rates have fallen 1%+, you're staying long-term, or your circumstances have improved significantly. Use this calculator to quantify the benefits and make an informed decision.
Frequently Asked Questions
What's a typical Early Repayment Charge?
ERCs on fixed-rate mortgages typically range from 1-5% of the outstanding balance, with some tiered (higher in early years, lower later). Tracker and variable mortgages often have no ERC. Check your mortgage offer to confirm your specific ERC.
When is the best time to remortgage?
6 months before your current deal ends is ideal—you can lock in a new rate without paying ERC. If rates have fallen significantly, it might be worth paying ERC to remortgage early. If rates are stable or rising, wait for your deal to expire.
What's a reasonable break-even period?
Break-even under 12 months is excellent. 12-24 months is good. Over 24 months, you're betting rates stay down; if they rise, you've locked in before bigger savings appeared. Consider your plans: staying long-term makes longer break-evens acceptable.
Should I add the arrangement fee to the mortgage or pay upfront?
Paying upfront saves interest (you pay interest on the fee if added). However, if you don't have cash reserves, adding to the mortgage keeps cash flexibility. Calculate the interest cost of adding the fee over the term; it's usually small compared to monthly savings.
Can I remortgage with the same lender?
Yes, but check if you'll face ERC. Some lenders allow switching products without ERC (e.g., fixed to fixed). Some charge; others offer incentives. Always ask your lender directly—it might be cheaper than switching lenders.
What if rates rise after I remortgage?
If you fix to a new rate and rates rise, you're protected—you keep your lower rate. If you switch to a tracker and rates rise, your payment increases. This is the trade-off: fixed rates give certainty; trackers offer potential savings if rates fall.
⚠️ Financial Disclaimer: This calculator is for educational purposes. Always check your current mortgage terms for exact ERC amounts and fees. Consult a mortgage broker for personalized advice before remortgaging.