Remortgaging means switching your existing mortgage to a new deal — either with your current lender or a different one. Done right, it can save you thousands of pounds, dollars, or loonies per year.
When Should You Remortgage?
1. Your Fixed Rate Is Ending
This is the most common reason. When your fixed rate period ends (usually after 2, 3, or 5 years), you automatically move to your lender’s Standard Variable Rate (SVR). SVRs are typically much higher than fixed rates.
| Current Deal | Typical SVR After | Monthly Payment (on £200,000) |
|---|---|---|
| 2-year fixed at 4.5% | 6.5% SVR | £1,050 vs £1,307 |
| 5-year fixed at 4.0% | 6.5% SVR | £1,050 vs £1,307 |
That is a difference of £257 per month — over £3,000 per year — for doing nothing.
2. Better Rates Are Available
If interest rates have dropped since you took out your mortgage, you may be able to switch to a cheaper deal.
3. You Want to Release Equity
If your property has increased in value, you can remortgage to borrow more against it (for home improvements, debt consolidation, or other purposes).
4. You Want to Overpay More
Different mortgages have different overpayment limits. If you want the flexibility to pay off your mortgage faster, remortgaging to a product with higher overpayment allowances makes sense.
How Long Before My Deal Ends Should I Start?
Start looking 3-6 months before your current deal ends. Here is why:
- Mortgage offers last 3-6 months: You can accept a new deal now and complete when your current one ends.
- Processing takes time: Applications, valuations, and legal work can take 4-8 weeks.
- No rush = better decisions: Starting early means you have time to compare and negotiate.
Pro tip: Many lenders will let you “port” your mortgage to a new property, but if you are staying put, a remortgage is usually better.
How to Remortgage: Step by Step
Step 1: Check Your Current Deal
Before you do anything, find out:
- When your current deal ends
- Whether there are early repayment charges (ERCs)
- What your current interest rate is
- How much you currently owe
- Your current property value (check Rightmove, Zoopla, or Zillow for an estimate)
Step 2: Check Your Loan-to-Value (LTV) Band
Your LTV is the percentage of your property value that you owe. Lower LTV means better rates.
| LTV Band | Example (£300,000 property) | Typical Rate Range |
|---|---|---|
| 95% | Owe £285,000 | 5.5-6.5% |
| 90% | Owe £270,000 | 5.0-5.8% |
| 85% | Owe £255,000 | 4.8-5.5% |
| 75% | Owe £225,000 | 4.3-5.0% |
| 60% | Owe £180,000 | 3.8-4.5% |
Step 3: Compare Deals
Use comparison sites or speak to a mortgage broker:
- UK: MoneySuperMarket, L&C, Habito, or your bank’s website
- US: Bankrate, NerdWallet, or LendingTree
- Canada: RateSupermarket, LowestRates.ca, or your bank’s website
Step 4: Check the Fees
Remortgaging is not always free. Watch out for these:
| Fee Type | Typical Cost | When It Applies |
|---|---|---|
| Early Repayment Charge (ERC) | 1-5% of balance | Leaving your current deal early |
| Arrangement fee | £0-£1,500 | Setting up the new deal |
| Valuation fee | £0-£500 | Lender values your property |
| Legal fees | £0-£500 | Some lenders cover this |
| Exit fee | £0-£300 | Leaving your current lender |
Key question: Does the new deal save you enough to cover all the fees?
Step 5: Apply
You will need:
- Last 3 months of payslips
- Last 3 months of bank statements
- Proof of ID
- Current mortgage statement
- Property details
Step 6: Complete
Once approved, your solicitor or conveyancer handles the switch. This usually takes 4-8 weeks.
Real Calculation: Is Remortgaging Worth It?
Let us look at a real example.
The Numbers
- Current mortgage: £200,000 remaining
- Current rate: 5.0% (2-year fixed ending soon)
- New rate available: 4.0% (2-year fixed)
- Term remaining: 20 years
Monthly Payment Comparison
| Scenario | Rate | Monthly Payment | Annual Cost |
|---|---|---|---|
| Stay on SVR (no action) | 6.5% | £1,491 | £17,892 |
| Switch to 4.0% fixed | 4.0% | £1,212 | £14,544 |
| Saving per month | £279 | £3,348 |
After Fees
| Fee | Amount |
|---|---|
| Arrangement fee | £999 |
| Valuation fee | £0 (free with new deal) |
| Legal fees | £0 (covered by lender) |
| Total fees | £999 |
Net saving in year 1: £3,348 - £999 = £2,349 Net saving over 2 years: £6,696 - £999 = £5,697
Over 2 years, switching saves you £5,697 — a clear win.
Remortgage Tips
- Don’t auto-switch to your lender’s SVR. This is usually the most expensive option. Always compare first.
- Check if your current lender has a better deal. You can sometimes switch to a new product without changing lenders (a “product transfer”), which avoids most fees.
- Use a broker. They can find deals you won’t see on comparison sites and handle the paperwork.
- Consider the total cost, not just the rate. A lower rate with high fees may cost more than a slightly higher rate with no fees.
- Don’t remortgage if you are near the end of your term. If you have less than 12 months left on your mortgage, it may not be worth the hassle and fees.
- Be honest about your circumstances. If your income has dropped or your credit score has suffered, you may not qualify for the best rates.
When Remortgaging Is NOT Worth It
- You have less than 12 months left on your mortgage term
- The fees outweigh the savings
- Your property value has dropped, pushing you into a higher LTV band
- You have recently changed jobs or have a lower credit score
- You are in the middle of a long fixed rate and the break fees are too high
Summary
Remortgaging is one of the easiest ways to save money on your mortgage. The key is to start early (3-6 months before your deal ends), compare deals properly, and factor in all the fees. For most people, the savings are well worth the effort.