When a fixed-rate mortgage deal ends and nothing replaces it, most lenders move you onto their standard variable rate, which is often considerably higher. Remortgaging is the habit of arranging the next deal before that happens. Because rates change constantly, this guide doesn't quote any; it explains timing, costs and the sums that decide whether switching is worth it.
When to start
- About six months before your deal ends: check the end date, any early repayment charge, your balance and your home's likely value
- Four to five months before: speak to a broker or compare deals, and apply
- Three to six months before: lock in an offer. Most lenders let you secure a new rate up to six months ahead, and under the Mortgage Charter participating lenders agreed to allow this for eligible customers
- The day your deal ends: the new rate starts, with no gap on the standard variable rate
Securing a deal early costs nothing in early repayment charges because the new mortgage begins when the old one finishes. Many offers last between three and six months, so check how long yours lasts.
Product transfer or full remortgage
| Product transfer (same lender) | Full remortgage (new lender) | |
|---|---|---|
| Speed | Often quick, sometimes within days | Usually several weeks |
| Paperwork | Often no new valuation or legal work, and usually no full new affordability check | A new application, valuation and legal work |
| Choice | Only your lender's current deals | The wider market |
| Costs | A product fee may apply | Fees may apply, though many deals include a free valuation or free legal work |
A product transfer in the middle of a fixed term doesn't automatically avoid an early repayment charge, because most lenders charge one on a transfer just as they do on a remortgage.
Costs to budget for
- An early repayment charge, typically 1% to 5% of the outstanding balance if you leave before the end of the deal, and usually falling each year
- A product or arrangement fee, which varies by lender and is sometimes traded against a higher rate
- A valuation, which many remortgage deals include free
- Legal fees, which some deals also cover
- An exit or administration fee that some lenders charge when you close the old mortgage
- A broker fee, if your broker charges one. Our guide to mortgage brokers in the UK explains how these work
A simple remortgage calculator
A remortgage calculator is only as good as the numbers you feed it, but the sums are straightforward.
- Break-even on an early repayment charge. If leaving early costs 3% of a £180,000 balance, that is £5,400. If the new deal saves you £150 a month, it takes 36 months to recover the charge. It only makes sense if you expect to stay with the new deal longer than that
- A fee against a rate. As an illustration, a deal that is 0.3 percentage points cheaper on £150,000 saves about £450 a year in interest. A £999 fee would take just over two years to recover. A fee added to the loan also accrues interest, which cuts the saving
Compare the APRC, which includes fees, and the total you will repay over the period you expect to keep the deal, not just the headline rate.
If you want to borrow more, or can't switch
A remortgage is sometimes used to release money for home improvements or to consolidate debt. Think carefully before turning unsecured debt into debt secured on your home; our guide to home equity loans in the UK explains the options and the risks. If your finances have changed and you worry you won't pass an affordability check, speak to your current lender early and ask what it can offer. Free, independent help is available from MoneyHelper and StepChange.