Remortgage

A remortgage calculator compares your current mortgage payments against what you would pay on a new deal. It takes three core inputs: your outstanding balance, your remaining term, and the interest rate you are currently paying. It then calculates what your monthly payment would be at a lower rate and shows the difference.

The calculation uses a standard repayment mortgage formula. For a repayment mortgage, the monthly payment equals the loan amount multiplied by the monthly interest rate, divided by one minus the result of one plus the monthly interest rate raised to the power of the total number of payments. Interest-only calculations are simpler: you multiply the outstanding balance by the annual rate and divide by 12.

Most calculators show three figures: your current monthly payment, your new monthly payment, and the monthly saving. More detailed tools also show the total interest you would pay over the remaining term on each deal, giving you the full picture of long-term savings. For a complete view of what you can borrow on a new deal, try the affordability calculator alongside this one.

Before running numbers, gather these details from your latest mortgage statement or online account:

• Outstanding balance: The amount you still owe. This is not the original loan amount. Check your latest annual statement or log in to your lender's portal.
• Current interest rate: Your exact rate, not the lender's headline. If your fixed or tracker deal has ended, you are likely on the standard variable rate (SVR), which is typically 1.5 to 2.5 percentage points above base rate.
• Remaining term: How many years and months are left on your mortgage. A shorter remaining term means higher monthly payments but less total interest.
• Property value: A current estimate, not what you paid. This determines your loan-to-value ratio, which directly affects the rates available to you.
• Early repayment charges: Check whether your current deal charges a penalty for leaving early. These typically range from 1% to 5% of the outstanding balance.

Your loan-to-value (LTV) ratio is the key factor that determines available rates. Divide your outstanding balance by your property value and multiply by 100. Lower LTV means access to better rates.

The savings depend on the gap between your current rate and the new rate, your outstanding balance, and the remaining term. Here are worked examples based on a £200,000 outstanding balance with 20 years remaining, assuming you switch to a 4.20% 2-year fixed rate at 75% LTV.

These figures show the raw monthly saving before fees. If your current deal charges an early repayment penalty of 2% on a £200,000 balance, that is £4,000. On a saving of £263 per month, the break-even point is around 15 months. After that, every month delivers a genuine saving.

Smaller balances still benefit from remortgaging. On a £150,000 balance at 6.5% moving to 4.20%, the monthly saving is roughly £197. Even on a £100,000 balance, the saving would be around £132 per month. To understand the full remortgage process and timeline, read our step-by-step guide.

A remortgage calculator only tells half the story if it ignores fees. To work out whether switching genuinely saves you money, subtract all costs from your projected savings.

To calculate the true saving, take your monthly saving and multiply it by the length of your new deal (for example, 24 months for a 2-year fix). Then subtract all one-off costs. If the result is positive, remortgaging saves you money. If you want to release equity at the same time, factor in how the larger balance affects your monthly payments.

A lower-rate deal with a £1,500 arrangement fee sometimes costs more over two years than a slightly higher rate with no fee. Always compare the total cost of the deal, not just the headline rate.

Remortgaging is not always the right move. In several situations, the numbers may not work in your favour:

• High early repayment charges: If you are within a fixed period and your lender charges 3 to 5% of the balance, the penalty can wipe out years of savings. Usually it is better to wait until your deal ends.
• Small balance remaining: On a mortgage below £50,000, the fees can outweigh the interest saving. Run the numbers carefully.
• Short remaining term: If you have fewer than 5 years left, the total interest saving may be too small to justify the costs and effort of switching.
• Property value has fallen: If your home is worth less than when you took out the mortgage, your LTV will be higher, potentially pushing you into a worse rate band.
• Changed circumstances: If your income has dropped or your credit score has worsened since your original mortgage, you may not qualify for a better rate.

In these cases, a product transfer with your existing lender could be a simpler alternative. Product transfers do not require a new affordability assessment or valuation, making them accessible even when your circumstances have changed. Check when to remortgage for guidance on timing your switch.