Compare your current and new mortgage rate — see your monthly saving and break-even point after fees.
You should consider remortgaging when your fixed-rate deal ends (typically 2–5 years), when rates have fallen significantly, when your home has risen in value improving your loan-to-value, or when your financial circumstances have improved and you qualify for better deals. Start looking 3–6 months before your current deal expires.
Typical remortgage fees include: arrangement/product fee (£0–£2,000), valuation fee (£0–£500), legal/conveyancing fees (£300–£800), and potentially an early repayment charge (ERC) of 1–5% of the outstanding balance if you leave your current deal early. Some lenders offer fee-free remortgage products.
Savings vary widely. On a £200,000 mortgage, dropping from 5.5% to 4.5% over a 20-year term could save around £120/month or £1,440/year. Always subtract total fees and divide by monthly saving to find your break-even point before proceeding.
An ERC is a penalty charged by your current lender if you leave a fixed-rate or tracker deal before the agreed end date. ERCs typically range from 1% to 5% of your outstanding balance and decrease each year of your deal. On a £200,000 mortgage a 2% ERC equals £4,000.
Remortgaging typically takes 4–8 weeks from application to completion. A product transfer with your existing lender can be completed in days. Using a mortgage broker and having documents ready can speed up the process considerably.