How Much Can Remortgaging Save Me? A Complete UK Guide

SVR Versus Fixed Rate: The Core Saving Calculation

The foundation of any remortgage saving calculation is the comparison between your current rate and the best available rate for your mortgage profile. For SVR borrowers, this gap is currently the largest it has been for many years. At 7.5% SVR versus 4.3% five-year fix, the rate gap is 3.2 percentage points. This gap directly determines your monthly saving.

Formula: Monthly saving = (Current rate - New rate) / 100 / 12 x Outstanding balance. For the average UK outstanding balance of £130,000: (7.5 - 4.3) / 100 / 12 x £130,000 = 0.032 / 12 x £130,000 = 0.002667 x £130,000 = approximately £347/month. Annual saving: £4,164. Five-year saving: £20,820.

This is the gross saving before any fees. The table below shows savings at different balances for the same SVR-to-five-year-fix comparison. £80,000 outstanding: saving £213/month, £12,800/year over five years. £130,000 outstanding: saving £347/month, £20,820 over five years. £200,000 outstanding: saving £533/month, £31,980 over five years. £300,000 outstanding: saving £800/month, £48,000 over five years. £400,000 outstanding: saving £1,067/month, £64,000 over five years.

Even for borrowers not on SVR — for example, those renewing a two-year fix taken at 5.5% in 2023 — the saving from securing the best available market rate rather than a standard renewal offer can be £50 to £200/month on a typical balance. Always compare the whole market rather than accepting your existing lender's first offer.

Early Repayment Charge Considerations: Is It Worth Switching Early?

If you are still within a fixed-rate period, switching early incurs an early repayment charge (ERC). ERCs are typically expressed as a percentage of the outstanding balance and reduce each year of the fixed term. A common structure for a five-year fix is: year 1 = 5%, year 2 = 4%, year 3 = 3%, year 4 = 2%, year 5 = 1%.

To calculate whether switching early is worthwhile, compare the ERC against the net monthly saving over the remaining time on the deal. Example: £130,000 outstanding in year 3 of a five-year fix with 3% ERC = £3,900 charge. Current rate 6% (a 2023 fix), new five-year fix at 4.3%. Monthly saving = (6 - 4.3) / 100 / 12 x £130,000 = £184/month. Break-even: £3,900 / £184 = 21 months. Remaining fixed term after break-even: if two years remain on the current deal, the ERC break-even of 21 months is within the deal period, so paying the ERC now and switching is financially neutral. If three years remain, switching now saves approximately (36 months x £184) - £3,900 = £6,624 - £3,900 = £2,724 net over the remaining term.

The break-even calculation is essential before acting. In general, switching early is worthwhile when: there are two or more years remaining on the current deal, the monthly saving exceeds £100, and the ERC is below three months of saving. For large mortgages, the higher monthly savings make earlier switching worthwhile even with material ERCs.

A broker will run this calculation for you as part of the initial advice process. The FCA requires that any recommendation to switch early accounts for the total cost including ERC and product fees versus the total saving over the new term. Do not rely on intuition alone — get the numbers.

Remortgage Fee Recoup: How Long Does It Take to Break Even?

Remortgaging involves costs. These typically include a product fee (£0 to £1,000 on most standard deals), legal costs (£300 to £700, often free on remortgages), and a valuation fee (typically £0 to £300, often free). In total, upfront remortgage costs range from £0 on a completely incentivised deal to approximately £2,000 on a full-cost product.

The fee recoup calculation is simple: Break-even months = Total fees / Monthly saving. Examples: £1,000 total fees at £150/month saving = 6.7 months break-even. £1,000 total fees at £250/month saving = 4 months break-even. £1,500 total fees at £150/month saving = 10 months break-even. £2,000 total fees at £300/month saving = 6.7 months break-even.

For the average SVR borrower saving £347/month with total fees of £1,000: break-even = 2.9 months. After less than three months, every subsequent month is pure saving. Over a five-year fixed term at this saving rate, the gross saving is £20,820, the net saving after £1,000 fees is £19,820 — a 19.8x return on the £1,000 invested in switching costs.

Many lenders offer completely free remortgage packages on standard residential properties — no product fee, free valuation, free legal work. In this scenario, the break-even is month one of the new deal and the full monthly saving accrues from day one. Ask your broker specifically about fee-free products and whether the slightly higher rate on a fee-free product costs more or less over your planned fixed term than a lower-rate fee-paying product.

Maximising Your Remortgage Saving: A Practical Checklist

To maximise your saving, work through the following steps. First: find your current rate and outstanding balance. Log in to your mortgage lender's online portal or check your most recent statement. Note the rate type (fixed or SVR), the rate itself, and when the current deal expires if applicable. This is your baseline.

Second: calculate your LTV. Divide your outstanding balance by an estimate of your property's current market value. Use recent local sold prices on Rightmove or an estate agent's estimate as a guide. The lower your LTV, the better rate you qualify for. LTV tiers are typically 60%, 65%, 70%, 75%, 80%, and 85% — check which tier your mortgage falls into, as moving into a lower tier significantly improves available rates.

Third: check your credit file. Use a free service such as Experian, Equifax, or TransUnion to view your credit report before applying. Address any errors or outdated information. Lenders use credit scores as part of affordability assessment, and a poor score may mean accessing a higher rate tier. Giving yourself time to improve your score before applying can unlock better rates.

Fourth: contact a whole-of-market mortgage broker. Provide your balance, LTV, income, and current rate. The broker will search the full market and present their best recommendation with a written suitability assessment. Compare their recommendation against the fee recoup formula above to confirm the net saving over your intended term. The FCA mandates that brokers act in your best interest — their recommendation must be justified and documented.

Fifth: time your application correctly. The FCA recommends starting three to six months before your current deal expires. Many lenders allow you to reserve a rate up to six months in advance. Reserve the best rate you can find now. Monitor rates monthly — if they fall before completion, ask your broker to switch to the lower rate. Begin the process today if you are already on SVR: there is no ERC and no reason to delay.