Loan Size and Rate Combinations That Save £200 Per Month
The following combinations all produce approximately £200 per month in savings. A 1% rate reduction on £240,000 saves £200/month. A 1.5% reduction on £160,000 saves £200/month. A 2% reduction on £120,000 saves £200/month. A 3.2% reduction (SVR to best five-year fix) on £75,000 saves £200/month.
In 2025 rate terms, the most common scenario is a homeowner with around £150,000 to £200,000 outstanding coming off SVR at 7.5% and securing a five-year fixed rate at 4.3%. That 3.2% reduction on £150,000 saves around £400/month — double the £200 target. On a £75,000 mortgage it delivers precisely £200/month.
Annual saving at £200/month: £2,400. Five-year saving: £12,000. This is a material sum relative to typical remortgage costs of £500 to £2,000. Even in the most costly scenario, the net five-year saving exceeds £10,000.
For homeowners not on SVR but renewing a two-year fix taken in 2023 at around 5.5%, switching to a 2025 best-buy five-year fix at 4.3% — a 1.2% improvement — saves £200/month on a £200,000 mortgage.
Why 800,000+ UK Homeowners Could Save More Than £200 a Month
It is estimated that over 800,000 UK homeowners are sitting on their lender's SVR at any given time. At an average SVR of 7.5% versus a best five-year fix of 4.3%, that is a 3.2% rate gap. On the average UK outstanding mortgage balance of approximately £130,000, this gap costs an extra £347 per month compared to the best available fix. In other words, the average SVR borrower is overpaying by more than £200 per month.
The inertia behind staying on SVR is understandable — switching takes effort and there is uncertainty around which deal is best. However, over 12 months the cost of inaction at £200 per month is £2,400. Over three years on SVR it becomes £7,200 in unnecessary interest payments.
A whole-of-market mortgage broker can typically identify the best available rate in under an hour and handle the entire switching process on your behalf. The FCA requires brokers to act in your best interest, and many offer fee-free services where the lender pays a procuration fee instead.
The 800,000 homeowners on SVR are collectively overpaying hundreds of millions of pounds per year in avoidable interest. If you are one of them, a remortgage application could start the process of reclaiming £200 or more per month.
