Remortgaging is usually worth it if your current deal is about to end, your home has risen in value, or you can move to a lower interest rate. It is often not worth it if you would face a large early repayment charge, your remaining balance is very small, or the fees would cancel out your monthly savings.
For most homeowners the honest answer is that it depends on your numbers, so this guide walks you through when switching pays off, when it does not, and how to work it out for your own situation. If you are new to the idea, it helps to start with what remortgaging is and how it works.
Table of Contents
When remortgaging is worth it
- Your current deal is ending. Most deals roll onto an expensive standard variable rate (SVR) once the initial term finishes. UK SVRs often sit somewhere around 6.5% to 7.5%, so switching to a new product before that happens can protect your monthly payment.
- You are already on the SVR. If you have slipped onto your lender’s variable rate, moving to a new fixed or tracker deal will almost always lower what you pay each month.
- Your home has gone up in value. A higher value lowers your loan-to-value (LTV), which is the size of your loan compared with your home’s worth. Lenders save their cheapest rates for lower LTV bands, such as 60% or below, so a rise in value can move you into a better bracket.
- You want to change your term. You might shorten your term to clear the mortgage sooner, or lengthen it to reduce monthly payments.
- You want to borrow more. Remortgaging can free up cash for releasing equity from your home, for remortgaging for home improvements, or for remortgaging for debt consolidation. Borrowing more does increase your overall debt, so weigh it carefully.
- You want more overpayment flexibility. If your current lender caps overpayments at 10% a year and you want to clear the loan faster, a new deal can lift that limit.
When remortgaging is not worth it
- You would pay a large early repayment charge (ERC). Leaving a fixed deal early usually triggers an ERC of about 2% to 5% of your outstanding balance. Unless rates have dropped a lot, this penalty can wipe out any saving.
- Your balance is very small. If you only owe a few thousand pounds, the upfront remortgage fees and costs, such as arrangement and legal fees, can cost more than the interest you would save.
- Your credit score has dropped. If you have missed payments or taken on new debt, a new lender may turn you down or offer a worse rate than your current one.
- You have very little equity. If values in your area have fallen and you are close to owing more than your home is worth, you may struggle to find a competitive new deal.
- Market rates are higher than your current rate. If rates have risen since you last borrowed, staying put may simply be cheaper.
Remortgage vs product transfer: which is right for you?
You do not always have to change lender to get a better rate. A product transfer keeps you with your current lender on a new deal, while a remortgage moves you to a new one. Here is how they compare.
Feature | Remortgage (new lender) | Product transfer (existing lender) |
Choice | Access to deals across the whole UK market | Limited to your current lender’s deals |
Fees | May involve legal, valuation and setup costs | Rarely involves legal or valuation fees |
Process | Full affordability and credit checks | Usually quick, with few or no new checks |
A product transfer with your current lender is often quicker and cheaper, but a full remortgage can unlock a better rate or let you borrow more. For a closer look at staying put, see our guide on remortgaging with the same lender. It is also worth understanding how this fits with mortgage renewals so you know your options as your deal ends.
How to work out if remortgaging will save you money
- Ask your lender for a redemption statement. This gives your exact outstanding balance and the date your current deal ends.
- Check for any fees. Note any early repayment charge or exit fee, and budget for arrangement, legal and valuation costs. Our guide to getting your home revalued explains the valuation step.
- Compare deals across the market. Look at what rate you could move to, not just the headline figure.
- Compare the total cost, not just the monthly payment. Add up the monthly payments across the deal term plus any product fees. The cheapest monthly payment is not always the cheapest deal overall.
Once you have run these numbers, our guide on how to choose a remortgage deal walks you through weighing up rate type, deal length, and true cost to land on the right one for you.
Not sure where to start? Work out your next move
The two questions that decide your next step are simple: when does your current deal end, and do you want to borrow more or simply lower your monthly payments?
- If your deal ends within about six months, it is usually worth starting now. You can often line up a new rate up to six months ahead and lock it in, which protects you if rates rise. Our guide on when to remortgage covers the timing, and how long remortgaging takes sets expectations on the process.
- If you mainly want to lower your monthly payments, focus on the interest rate and the term. A lower rate, or a slightly longer term, reduces what you pay each month.
- If you want to borrow more, look at releasing equity for home improvements or for debt consolidation, and check how the extra borrowing changes your monthly cost.
Is it worth remortgaging early?
Remortgaging before your current deal ends can be worth it, but the early repayment charge is the deciding factor. ERCs are typically 2% to 5% of your outstanding balance, and they often fall the closer you get to the end of your deal.
It can still pay to switch early if rates have dropped enough that your saving over the new deal is larger than the charge. Always run the total-cost comparison above before committing, including the ERC.
Is it worth remortgaging right now?
Whether now is the right moment comes down to how today’s rates compare with your current rate, and how soon your deal ends. If you are on, or about to move to, the SVR, acting sooner usually helps.
If you are locked into a low fixed rate with a high ERC, waiting may be the better call. Because rates move, we keep a dedicated guide on whether now is a good time to remortgage that reflects the current market.
How Speedy Remortgage can help
Before you commit, our remortgage calculator is a fast way to estimate your new monthly payment and compare it with what you pay now. Use it alongside the total-cost steps above, then compare deals to see what you could actually move to.
Whenever you are ready, our easy-to-use online tool lets you compare remortgage deals from lenders across the UK, so you can see whether switching, or staying put, works out cheaper. Once you have found a deal that suits you, our specialists are on hand to guide you through it, from the paperwork to dealing with the lender. We take the time to understand your circumstances and long-term plans, so the option you choose is the right one for you.
If you would like a hand, get in touch. We are here to keep the process simple and help you secure a remortgage that suits your goals.
FAQs
The main downsides are the costs and the checks. You may face an early repayment charge on your current deal, plus arrangement, legal, and valuation fees, and a new lender will run full affordability and credit checks. If your balance is small or rates have risen, those costs can outweigh the saving. Always compare the total cost before switching.
It depends on how today’s rates compare with your current rate, and how close you are to the end of your deal. If you are on the SVR, or about to be, acting sooner usually helps. If you are locked into a low fixed rate with a high ERC, waiting may be better. For a view that reflects current conditions, see our guide on whether now is a good time to remortgage.
Usually it is easier. You already own the property and have a repayment track record, so a like-for-like switch tends to involve less work than your original purchase, with no chain and often a simpler valuation. It can be more involved if your income or circumstances have changed, or if you are borrowing more. Our guide on whether remortgaging is easy covers this in more detail.
It can be, if you need the money for something worthwhile such as home improvements or consolidating higher-interest debt. Remember it increases your overall borrowing.
Staying with your lender on a product transfer is often quicker and cheaper, but a remortgage gives you the whole market and the option to borrow more. Compare both before deciding.
Yes, though you may need to show more proof of income. Our guide to remortgaging when you are self-employed explains what lenders look for.
About the Author:
Matt is a top contributor at Speedy Remortgage and has worked in the financial services industry for over a decade now. Through his expertise on mortgage and remortgage has helped hundreds of customers to achieve their property goals.