What this calculator is actually comparing
Remortgaging only makes financial sense once the saving from a lower rate outweighs the cost of switching, so this calculator puts both sides of that equation side by side. It calculates your current monthly payment and a new monthly payment at the rate you're considering, both amortised over the same remaining term so the comparison is fair, then works out your monthly saving, roughly how many months it would take that saving to cover the fees involved in switching, and an estimated total saving over the rest of the term once those fees are accounted for.
Why staying on your existing deal can quietly cost you
Most fixed-rate and tracker mortgages run for two, three or five years, after which, if you do nothing, you're moved onto your lender's standard variable rate (SVR) — almost always considerably higher than the deals available elsewhere on the market. Because this happens automatically, without a specific decision on your part, it's easy to drift onto an SVR simply through inaction, particularly if life is busy around the time your deal happens to end. The gap between a competitive fixed rate and a typical SVR can easily run to one or two percentage points, which on a £220,000 mortgage translates into hundreds of pounds a month. Reviewing your options three to six months before your current deal ends, rather than waiting for the letter announcing you've moved to the SVR, is one of the simplest ways to avoid this.
The real cost of switching
Remortgaging isn't free, and the fees involved vary depending on the route you take. A product or arrangement fee is charged by the new lender, sometimes payable upfront and sometimes added to the loan (which reduces the saving, since you then pay interest on the fee too). A valuation fee may apply, though many lenders now offer this free as part of a remortgage package. Legal fees cover the conveyancing work needed to register the new mortgage, though again, many deals include free legal work for a straightforward remortgage. If you're leaving your current deal before its fixed term ends, you may also face an early repayment charge from your existing lender, which is usually large enough to rule out switching before the deal has naturally ended. Our guide to remortgage costs breaks each of these down in more detail.
Product transfers as an alternative
Switching to a new deal doesn't always mean switching lender. A product transfer — moving to a new rate with your existing lender rather than remortgaging elsewhere — is often quicker, involves less paperwork, and doesn't require a fresh affordability assessment, which can matter if your circumstances have changed since you last applied (a change of job, for instance, or taking on new debt). The trade-off is that your current lender's product transfer rates aren't always the most competitive on the market, so it's worth comparing them against what a full remortgage could achieve before assuming a product transfer is automatically the easier, cheaper option. Our product transfers versus remortgaging guide covers this trade-off in full.
Your loan-to-value affects what's actually on offer
The rate you're quoted when remortgaging depends heavily on your current loan-to-value ratio, which may well have improved since you took out your original mortgage — through a combination of capital repayment and, in many areas, rising property values. Moving from, say, an 80% LTV down to 70% can unlock a noticeably cheaper pricing tier, so it's worth getting an up-to-date valuation before assuming your options are the same as they were a few years ago. You can check where you currently sit using our loan-to-value calculator.
Reading the result sensibly
A positive monthly saving with a payback period well within your new deal's term generally points towards remortgaging being worthwhile, particularly if the fees can be recouped within the first year or so. A very long payback period, or a case where the new rate barely beats your current one once fees are included, is a sign to shop around further or to weigh a product transfer instead. Bear in mind that this tool compares like-for-like repayment terms and doesn't account for changes to the length of your mortgage, switching to interest-only, or borrowing additional funds as part of the remortgage, all of which would change the comparison meaningfully.