Remortgaging explained: timing, costs and traps
Roughly a fifth of UK mortgage holders are sitting on a standard variable rate at any given time, mostly because a fixed deal ended and nobody did anything. At 7.03% average SVR against 5.12% for a new five-year fix, that inaction costs around £234 a month on a £200,000 balance. This guide is about not being in that group.
In this guide
When to start
Six months before your current deal ends. Not three, not one.
Most lenders issue mortgage offers valid for three to six months, and the rate is held for that whole period. So you can secure a rate half a year out, and if the market improves before completion, most lenders will let you switch down to their cheaper product. You get the upside of a fall and protection from a rise. There is no equivalent argument for waiting.
The other reason to start early is that a full remortgage takes four to eight weeks from application to completion, and chains of small delays are normal. Leaving it to the final month means real risk of landing on the standard variable rate for a month or two while paperwork completes, which is exactly the outcome you are trying to avoid.
Product transfer vs full remortgage
These are two genuinely different things and the distinction matters more than most people realise.
| Product transfer | Full remortgage | |
|---|---|---|
| What it is | New deal with your current lender | Moving to a different lender |
| Affordability check | Usually none | Full assessment |
| Credit search | Usually soft or none | Hard search |
| Legal work | None | Required, often free with the deal |
| Valuation | None or automated | Required |
| Time | Days | Four to eight weeks |
| Rate | Only what your lender offers | The whole market |
| Can you borrow more? | Sometimes, with checks | Yes, subject to affordability |
The sensible sequence is to get your existing lender's product transfer quote first, which takes minutes in the app, and then check whether the open market beats it by enough to justify a full application. Often it does by a meaningful margin. Sometimes it does not, and the transfer is simply the better answer.
A product transfer is also the safer route if your circumstances have deteriorated: recently self-employed, on probation, income reduced, or new credit problems. Because it typically skips the affordability assessment, it can be available when a full remortgage would be declined.
What it costs
- Product fee: £0 to £1,999. The biggest variable. Fee-free products exist at a slightly higher rate and win on smaller balances.
- Legal and valuation: usually £0. Most remortgage products include free standard legal work and a free valuation. Confirm this rather than assuming.
- Early repayment charge: 0 to 5% of the balance. Only if you leave a fixed deal early. On £185,000 a 3% ERC is £5,550, which is a genuine barrier.
- Broker fee: £0 to £500. Many are paid by the lender instead.
- Exit or deeds release fee: £50 to £300. Charged by your outgoing lender.
Working out whether it is worth it
The comparison people usually make is between the two rates. That is the wrong comparison. What matters is the total cost over the length of the new deal, including every fee, which is what the remortgage calculator does.
A worked example. You have £185,000 outstanding, 21 years remaining, currently on a 7.03% standard variable rate. A new five-year fix at 5.12% with a £999 fee:
- Current payment: £1,407 a month
- New payment: £1,200 a month
- Saving: £207 a month
- Cost to switch: £999
- Break-even: month 5
- Net saving over the five-year deal: £11,417
That is an obvious yes. The decision gets genuinely difficult when you are mid-fix with an early repayment charge, or when the balance is small enough that a £999 fee eats the rate saving. Below roughly £50,000 outstanding, look specifically for fee-free products even at a higher headline rate.
Using your LTV as leverage
Two things have been quietly working in your favour since you took the mortgage: you have repaid capital, and the property has probably gained value. Together those can move you into a cheaper pricing tier.
The tiers are hard steps, not a smooth curve. 80.1% LTV is priced as 85%. So if you are close to a boundary, a targeted lump sum before you apply can pay for itself several times over in the rate.
Worth checking before you apply. On a £200,000 balance, moving from the 85% tier to the 80% tier saves roughly £27 a month, about £1,600 over a five-year fix. If you need £4,000 of overpayment to get there, that is not obviously worth it. If you need £900, it clearly is. Work out your exact position on the remortgage calculator and model the lump sum on the overpayment calculator.
Borrowing more at the same time
Remortgaging is the usual way to fund an extension, a loft conversion or a new kitchen, because secured borrowing at around 5% is far cheaper than an unsecured loan at 8 to 12%.
Two cautions. First, spreading £30,000 of kitchen over 21 years at 5.12% costs about £19,000 in interest, so the cheap monthly rate hides an expensive total. Consider a shorter term on the additional borrowing if your lender allows it. Second, additional borrowing triggers a full affordability assessment even with your existing lender, so it is not a formality.
When remortgaging is difficult
- You are a mortgage prisoner. If your circumstances have changed so that no new lender will take you, a product transfer with your current lender is normally still available and does not usually require a fresh affordability check. This right exists specifically to stop people being trapped on an SVR.
- Your property value has fallen. A higher LTV means worse pricing and, in severe cases, no available products. A product transfer is again the fallback.
- You are close to retirement. Lenders cap the term by age, typically at 70 to 75. A shorter available term means a higher monthly payment, which can fail affordability even though you are borrowing less.
- Recent adverse credit. Missed payments in the last six months narrow your options sharply. Waiting until they age past six or twelve months materially improves what is available.
The one habit that matters. Put a calendar reminder six months before your deal ends, right now, on whatever device you actually check. Everything else in this guide is optimisation; that reminder is the thing that prevents the expensive mistake.