Remortgage Guide UK 2025: When & How To Remortgage
Remortgaging is one of the most significant financial decisions a UK homeowner makes, yet millions of people miss the optimal window and end up paying hundreds of pounds more per month than necessary. According to the FCA's Mortgage Market Study, over 800,000 UK borrowers sit on their lender's Standard Variable Rate (SVR) at any given time — typically paying 2–3% more than the best available deals. On a £200,000 mortgage, that difference costs approximately £3,000 to £6,000 extra per year.
This guide covers everything you need to know: the right time to start, the true costs involved, the difference between a product transfer and a full remortgage, how your loan-to-value affects your options, and the specific rules around self-employed applicants, cash-out remortgaging, and porting.
Typical annual saving when switching from an SVR of 7.5% to a competitive fixed rate of 4.5% on a £200,000 mortgage
When Should You Remortgage?
There are five main situations that should prompt you to review your mortgage deal. Understanding each one helps you act at the right time rather than reactively.
1 Your Fixed Rate Deal Is Ending
The most common reason to remortgage. When your fixed, tracker or discounted rate period ends, your lender automatically moves you onto their Standard Variable Rate (SVR). In 2025, most major UK lenders have SVRs between 7% and 8.5% — significantly above the best available fixed rates of 4.0%–5.0%. There is no reason to stay on an SVR unless you expect to sell or pay off the mortgage very shortly.
Action point: Diarise the end of your current deal and begin researching six months before that date. Many lenders will honour a rate reservation for up to six months, meaning you can lock in today's rate and complete the switch when your current deal finishes — without paying any ERC.
2 A Better Deal Has Become Available
If interest rates have fallen significantly since you took out your mortgage, it may be worth paying an Early Repayment Charge to switch early. The calculation is straightforward: compare the ERC cost against the monthly saving on a new deal, multiplied by the number of months remaining in your current deal.
Example: Your current balance is £180,000, you are 2 years into a 5-year fix at 5.5%, and a new deal at 4.2% is available. The ERC is 3% = £5,400. The monthly saving would be approximately £140, so you would break even in just under 39 months. With 3 years remaining on your current deal, you break even before the deal ends — making the switch worthwhile.
3 You Need to Raise Funds (Cash-Out Remortgage)
Remortgaging can release equity built up in your property as a tax-free lump sum. Common reasons include funding a home extension, consolidating high-interest debts, purchasing an investment property, or covering significant life expenses. Mortgage interest rates are typically far lower than personal loan or credit card rates, making this an attractive option for large borrowing needs.
Caution on debt consolidation: While consolidating unsecured debts into your mortgage reduces monthly outgoings, you are converting short-term debt into long-term debt secured against your home. A £10,000 credit card balance cleared over 25 years at 4.5% costs more in total interest than clearing it over 3 years at 20% if you have the discipline to do so. Always model both scenarios carefully.
4 Debt Consolidation or Change in Circumstances
A significant change in financial circumstances — such as a promotion, inheritance, divorce settlement, or major debt reduction — can make a remortgage beneficial even mid-deal. Equally, if you are struggling with multiple high-interest debts, remortgaging to consolidate (with careful consideration of the risks described above) can provide breathing room.
If you are remortgaging following a divorce or separation and need to remove a partner from the mortgage, this typically requires a full remortgage rather than a simple product transfer, as the lender will need to reassess affordability based on a single income.
5 Changing Your Mortgage Term Length
Remortgaging provides an opportunity to shorten your mortgage term (paying more each month but finishing sooner and saving significant interest) or lengthen it (reducing monthly payments at the cost of more total interest). Some borrowers who took on a 35-year term as first-time buyers choose to shorten the term at each remortgage as their income grows, systematically reducing the mortgage's total cost.
How Early Should You Start? The 3–6 Month Rule
The single most important timing insight is this: start your remortgage research 3 to 6 months before your current deal expires. Here is why this window matters:
- Most lenders hold rate offers for 3 to 6 months. You can secure today's rate and complete the switch the day your current deal ends.
- Conveyancing takes time. A full remortgage (switching lenders) involves a solicitor and can take 4–8 weeks from application to completion. Starting late risks an SVR gap.
- Broker research takes time. A whole-of-market broker needs time to search the full market, obtain your documents, and submit an application.
- Product transfer (PT) is faster but still benefits from advance planning. Your existing lender may offer rate reservations 3–6 months out.
Remortgaging Costs: A Complete Breakdown
Understanding the full cost of remortgaging is essential for making an accurate comparison. Here is every fee you may encounter:
| Fee | Typical Cost | Notes |
|---|---|---|
| Early Repayment Charge (ERC) | 1%–5% of outstanding balance | Only applies if switching before current deal ends. £0 on SVR. |
| Arrangement / product fee | £0–£1,999 | Can be added to mortgage (but you pay interest on it). Fee-free deals exist but often at higher rates. |
| Valuation fee | £0–£500 | Many lenders offer free valuations for remortgages. Desktop or drive-by valuations are common. |
| Legal / conveyancing fees | £0–£500 | Often provided free or as cashback for remortgage-only cases (no purchase involved). Check deal terms. |
| Broker fee | £0–£500 or % of loan | Whole-of-market brokers may charge a fee or earn commission from the lender. Always clarify. |
| Total typical cost (no ERC) | £0–£2,500 | Often offset by monthly savings within 12–18 months on a lower rate. |
Product Transfer vs Full Remortgage: Which Is Right?
Product Transfer (Stay With Your Lender)
- Faster — often completed in days
- No solicitor required
- No new valuation needed
- No credit check (usually)
- No legal fees
- Lower admin burden
Full Remortgage (Switch Lender)
- Access to whole market rates
- Can borrow additional funds
- Can add or remove a name from the mortgage
- Can extend or shorten term more freely
- Often better rates available
- Requires solicitor and valuation
Research by the FCA has shown that a significant minority of borrowers are better off switching lenders rather than taking a product transfer, even after factoring in costs. However, for straightforward remortgages where you want a quick, low-hassle switch at the end of your deal and your lender's rate is competitive, a product transfer is perfectly sensible. Always compare your lender's PT offer against the wider market before accepting.
Loan-to-Value (LTV) and Remortgage Rates
Your LTV — the ratio of your mortgage balance to your property's current market value — is the single biggest factor in determining which interest rate tier you qualify for. As your LTV falls (because your property value rises, you repay capital, or both), you move into lower rate tiers that can save hundreds of pounds per month.
| LTV Band | Typical 2-Year Fix (2025) | Typical 5-Year Fix (2025) | Access to Deals |
|---|---|---|---|
| 60% LTV | 4.1%–4.4% | 3.9%–4.2% | Best rates, widest choice |
| 70% LTV | 4.2%–4.6% | 4.0%–4.5% | Excellent rates |
| 75% LTV | 4.3%–4.8% | 4.1%–4.6% | Good mainstream rates |
| 80% LTV | 4.5%–5.0% | 4.3%–4.8% | Standard rates |
| 85% LTV | 4.8%–5.4% | 4.6%–5.2% | Fewer lenders, higher rates |
| 90% LTV | 5.2%–6.0% | 5.0%–5.8% | Limited lenders, significantly higher rates |
Practical tip: If you are close to a lower LTV threshold, consider making a small overpayment or lump sum payment before applying for your remortgage. Dropping from 81% to 79% LTV could unlock a meaningfully cheaper rate tier, potentially saving more than the overpayment cost over the new deal period.
Cash-Out Remortgage: Releasing Equity
A cash-out remortgage (also called equity release through remortgaging) allows you to borrow more than your current outstanding mortgage balance. The difference between the new, larger mortgage and your existing balance is paid to you as a cash lump sum.
Example: Your home is worth £350,000 and your outstanding mortgage is £180,000, giving you £170,000 in equity and an LTV of around 51%. You could remortgage to £220,000 (63% LTV), releasing £40,000 in cash for a home extension while still remaining within an attractive rate tier.
Common reasons for cash-out remortgages in 2025:
- Home improvements: Extensions, loft conversions, kitchen or bathroom renovations. These can add value to the property, partially offsetting the extra borrowing.
- Debt consolidation: Clearing credit cards, car finance or personal loans at lower interest rates. See the caution above about converting short-term debt to long-term secured debt.
- Purchasing a buy-to-let property: Using equity as a deposit on an investment property. See our Buy-to-Let Guide for the full tax and cost picture.
- Gifting a deposit to a child: Increasingly common as first-time buyer deposits have grown. This is referred to as a "Bank of Mum and Dad" contribution.
Porting a Mortgage: Taking Your Deal When You Move
If you are moving home while still in a fixed-rate period, porting allows you to transfer your existing mortgage deal to the new property and avoid paying an ERC. Most standard UK residential mortgages are portable in principle, but porting is not guaranteed — it is subject to a new affordability assessment on your current income and circumstances.
Key points about porting:
- You apply to your lender to port the mortgage when you have accepted an offer on a new property.
- If you are buying a more expensive property, you will need to top up the mortgage with additional borrowing, often on a separate rate.
- If you are downsizing and releasing capital, you may still face an ERC on the portion you are repaying.
- If your financial circumstances have changed since you originally took the mortgage (reduced income, increased debt, etc.), you may fail the new affordability assessment even if you wish to port.
- Porting timelines must align with the completion dates on both properties, which can cause complications in a chain.
Remortgaging When Self-Employed
Self-employed applicants face additional documentation requirements when remortgaging, but the market has become considerably more accessible since the pandemic drove an increase in self-employment. Here is what you will typically need:
- SA302 forms: HMRC's self-assessment tax calculation for 2 to 3 years. Download these directly from your HMRC online account or request them from your accountant.
- Tax Year Overviews: HMRC-generated documents confirming what you have been assessed for. Required alongside SA302s.
- Business accounts: Some lenders require 2–3 years of accounts certified or prepared by a qualified accountant.
- Bank statements: Typically 3 months of business and personal accounts.
- Proof of contracts (contractors): If you work as an IT contractor or similar, some lenders will assess income based on your day rate rather than accounts — a significant advantage.
Sole traders and partners are assessed on net profit. Limited company directors are assessed on salary plus dividends (and some lenders include retained profits in their calculation). Working with a broker experienced in self-employed mortgage cases significantly improves your access to competitive rates and lenders who understand variable income.
Broker vs Direct Lender: Which Route to Take?
You can approach lenders directly or use a mortgage broker. Both routes have merit depending on your circumstances:
Using a Whole-of-Market Broker
- Access to deals not available direct
- Broker handles paperwork and chasing
- Expert advice on your specific situation
- Better for complex cases (self-employed, debt, credit issues)
- Can compare hundreds of lenders simultaneously
Going Direct to a Lender
- Some lenders offer exclusive direct-only rates
- No broker fee
- Good for simple, straightforward remortgages
- Faster if your lender offers a product transfer
- You control the process directly
FCA data consistently shows that borrowers who use a whole-of-market broker are more likely to access competitive rates and less likely to end up on an SVR. For most borrowers, especially those with any complexity in their circumstances, a broker is worth the time investment.
UK Remortgage Market: Key Statistics
- Approximately 1.5 million UK homeowners remortgage each year (UK Finance data).
- The FCA's MCOB rules require lenders to contact borrowers 3 months and 30 days before their deal ends with information about switching options.
- The average SVR in early 2026 is approximately 7.5%–8.0% across major UK lenders.
- The average arrangement fee in the UK market is approximately £999–£1,499.
- Approximately 40% of remortgages involve additional borrowing (cash-out) according to UK Finance.
- The FCA estimates that over 2 million households could save money by switching from their current deal.
Frequently Asked Questions
You should start looking to remortgage 3 to 6 months before your current deal ends. Many lenders allow you to lock in a new rate up to 6 months in advance, and that offer will be held for you even if rates change. Starting early means you avoid rolling onto your lender's Standard Variable Rate (SVR), which is typically 2–3% higher than the best fixed deals available.
An Early Repayment Charge is a fee your lender imposes if you repay your mortgage or switch to another deal before your current fixed, tracker or discounted rate period ends. ERCs typically range from 1% to 5% of your outstanding mortgage balance, often on a sliding scale that decreases year by year. For example, a 5-year fix might carry a 5% ERC in year 1 falling to 1% in year 5. Always calculate whether the saving on a new rate outweighs the ERC before switching early.
A product transfer (PT) means switching to a new deal with your existing lender. It is typically faster, cheaper and requires less paperwork than a full remortgage — no valuation, no legal fees and usually no credit check. However, you are limited to your current lender's product range and cannot borrow additional funds. A full remortgage means switching to a new lender, which opens access to a wider range of rates and allows you to raise additional capital against your property.
Loan-to-value (LTV) is the ratio of your mortgage balance to your property's current value. Lower LTV means less risk for the lender, so you receive better interest rates. The main rate tiers in the UK market are 60%, 65%, 70%, 75%, 80%, 85%, and 90% LTV. Crossing a lower threshold when you remortgage — for example dropping from 80% to 75% by making overpayments — can unlock significantly better deals worth hundreds of pounds per year.
Yes. A cash-out remortgage allows you to borrow more than your current outstanding mortgage, with the difference paid to you as a lump sum. This is a common way to fund home improvements such as extensions, loft conversions or kitchen refits. Lenders will assess your income and the new LTV. Bear in mind that you will be borrowing more and paying interest on a larger balance, so the total cost over the mortgage term will be higher even if the rate is lower than a personal loan.
Yes. Self-employed applicants typically need to provide two to three years of SA302 forms (HMRC tax calculations) and corresponding tax year overviews. Some lenders also request certified accounts from a chartered accountant. Lenders will usually assess income based on net profit (sole traders/partnerships) or salary plus dividends (limited company directors). Working with a mortgage broker experienced in self-employed cases can significantly improve your chances of securing a competitive deal.
Porting means transferring your existing mortgage deal to a new property when you move home. This can be useful if you are mid-way through a fixed-rate deal and want to avoid the ERC. However, porting is subject to the lender's approval and a new affordability assessment. If you are buying a more expensive property, you will need to borrow additional funds at a potentially different rate. Not all mortgages are portable, so always check your terms before agreeing to a property purchase.