Remortgage Calculator UK 2025

What Is Remortgaging and When Should You Do It?

Remortgaging means switching your existing mortgage to a new deal — either with your current lender (a product transfer) or with a new lender. The primary reasons people remortgage in the UK are to secure a lower interest rate, to release equity from their home, to change the mortgage term, or to consolidate debts. In 2025, with mortgage rates having risen significantly from historic lows, remortgaging is one of the most impactful financial decisions a homeowner can make.

The optimal time to begin looking at remortgage options is three to six months before your current deal expires. Most lenders allow you to secure a rate up to six months in advance, so you can lock in a competitive deal without paying an early repayment charge. If your current deal has already ended and you are on your lender's standard variable rate (SVR), you can remortgage immediately — SVRs are typically 2% to 4% higher than competitive fixed-rate deals.

Understanding Early Repayment Charges

An early repayment charge (ERC) is the most significant cost to consider when remortgaging before your deal expires. ERCs are calculated as a percentage of your outstanding mortgage balance and are specified in your original mortgage offer. Typical ERC structures for a five-year fixed-rate mortgage might be: 5% in year one, 4% in year two, 3% in year three, 2% in year four, and 1% in year five.

For a mortgage balance of £200,000 with a 3% ERC, the penalty is £6,000. This means you would need to save at least £6,000 in lower interest payments to break even — before accounting for any arrangement fees on the new deal. Our calculator computes the precise break-even point so you can see whether the switch makes financial sense.

Some lenders permit overpayments of up to 10% of the outstanding balance each year without triggering an ERC. If you can reduce your balance through permitted overpayments before remortgaging, the ERC will be applied to a lower balance, reducing the absolute cost.

Arrangement Fees and Total Cost of Borrowing

When comparing remortgage deals, the headline interest rate is only part of the picture. Arrangement fees — also called product fees — can range from zero to £2,000 or more. Some lenders charge a percentage of the loan amount (typically 0.5% to 1%), which can be very costly on larger mortgages.

A deal with a slightly higher rate but no fee may be cheaper overall than a low-rate deal with a £2,000 arrangement fee, particularly on smaller mortgage balances or shorter fixed terms. For example, on a £150,000 mortgage over a two-year fix, a rate of 4.8% with no fee versus 4.5% with a £1,499 fee: the saving from the lower rate over two years is approximately £888, which does not offset the £1,499 fee — making the no-fee deal better value.

Remortgage to Release Equity

Releasing equity by remortgaging to a higher balance is a common way to fund home improvements, help family members, or consolidate more expensive debts. Most lenders will allow residential remortgages up to 85% to 90% of the property's value (loan-to-value). To access the best rates, aim for an LTV of 75% or below.

When consolidating unsecured debts (credit cards, personal loans) into a remortgage, be aware that you are converting short-term debt into long-term secured debt. While the monthly payments may be lower, you could pay more interest overall and your home is at risk if you cannot keep up repayments. This should be approached carefully and ideally with independent financial advice.

The Remortgage Process: Step by Step

The remortgage process in the UK typically takes four to eight weeks from application to completion. The steps are: 1) Research deals and use a broker or comparison site to identify options. 2) Get an Agreement in Principle (AIP) from your chosen lender. 3) Submit a full mortgage application with proof of income, bank statements, and ID. 4) The lender will conduct a valuation of your property (often a desktop valuation for remortgages). 5) Legal work is carried out by a conveyancer — many lenders offer a free legal service for standard remortgages. 6) Completion: the new lender pays off the old mortgage and your new deal begins.

Using a whole-of-market independent mortgage broker can save time and often secures better rates, as brokers have access to deals not available directly to the public. Many mortgage brokers are fee-free (they are paid by the lender) or charge a modest flat fee of £200 to £500.

Remortgaging for Buy-to-Let Properties

Buy-to-let remortgages are subject to different rules from residential mortgages. Lenders assess affordability on rental coverage: typically the rental income must cover 125% to 145% of the monthly mortgage payment at an assessed stress-test rate (often 5.5% to 6%). Since the introduction of Section 24, many buy-to-let landlords have found it harder to meet affordability criteria, particularly higher-rate taxpayers. Limited company remortgages are increasingly popular, as lenders assess company income separately and can still deduct mortgage interest as a business expense for tax purposes.

Interest-Only vs Repayment Remortgages

When remortgaging, you can choose whether to switch to a repayment (capital and interest) mortgage, remain on interest-only, or switch from one to the other. Repayment mortgages guarantee the mortgage is cleared at the end of the term. Interest-only mortgages have lower monthly payments but require a credible repayment vehicle (such as an ISA, pension, or investment portfolio) to clear the capital at maturity. Many interest-only borrowers from the 2000s are now approaching maturity and face significant challenges if their repayment vehicle is insufficient.

Frequently Asked Questions