Remortgaging: How to Switch and What It Costs

When your fixed or tracker deal ends, you do not stay on it — you drop onto your lender's standard variable rate (SVR), which is almost always significantly higher. Remortgaging is how you avoid that cliff. The mechanics are simple; the timing and the fee maths are where people lose money.

The SVR trap — why timing matters

Say your 2-year fix ends in June. From July, your balance moves to the SVR — often several percentage points above competitive deals. On a £200,000 balance, a 3-point rate difference is roughly £500 a month. There is no notification that makes this urgent — the lender just applies it.

Start looking 3–6 months before your deal ends. Most lenders let you secure a new rate up to six months in advance, so you can lock a deal and have it begin the day your current one expires — no SVR month in between.

Product transfer vs remortgaging away

You have two options:

• Product transfer — switch to a new deal with your existing lender. Usually no credit check, no valuation, no legal work, and can be done in days. The rates are not always the lender's best — compare before accepting.
• Remortgage to a new lender — full application: credit check, valuation, legal work. More hassle, but it opens the whole market. Many remortgage deals include free legal work and a free valuation, which removes most of the friction cost.

The right answer is whichever gives the lower total cost — your current lender's retention deal occasionally wins, but you only know if you compare.

Compare on true cost, not headline rate

Two deals to compare: a 4.4% rate with a £999 fee versus 4.6% fee-free. The honest comparison is rate + fees over the fixed term:

• On a £150,000 balance over 2 years, the fee-free 4.6% can easily beat the cheaper headline rate once the £999 is added.
• On a £400,000 balance, paying the fee for the lower rate usually wins.

You can add the arrangement fee to the loan — but then you pay interest on it for the entire mortgage term, which quietly doubles its real cost. Pay it upfront if you can.

Watch for early repayment charges (ERCs) on your current deal too. Leaving a fix early typically costs 1–5% of the balance, often reducing each year of the fix. If your deal has an ERC, it is usually best to set the new mortgage to start the day it expires — your solicitor can time this.

Check your LTV band first

Your rate depends heavily on your loan-to-value. If your home has risen in value or you have paid the balance down, you may have crossed into a better LTV band without noticing — 75% LTV rates are materially better than 85%.

If you are just above a band boundary, a small overpayment before remortgaging can drop you into the cheaper tier. Check your balance and get a realistic idea of your home's current value (sold prices near you, not asking prices).

Borrowing more

Remortgaging is also how people release equity — for renovations, for example. A few cautions:

• Borrowing £30,000 for a kitchen over 25 years costs far more in total interest than the same amount over 5 years, even at a lower rate. Match the term to the purpose.
• A further advance from your current lender or a second-charge secured loan are alternatives — compare all three.
• Never consolidate short-term debts into a 25-year mortgage without doing the total-cost maths — you can end up paying for this year's car for two decades.

The process, roughly

1. Check your current balance, deal end date and ERC.
2. Compare deals on true cost — or use a whole-of-market broker (usually free to you; they are paid by the lender).
3. Apply; lender does credit check and valuation.
4. Legal work transfers the mortgage (often via the lender's free-legals firm).
5. New deal starts; old lender is repaid.

Budget 4–8 weeks for a switch to a new lender, less for a product transfer.

This guide is general information, not a mortgage recommendation or financial advice. Rates and fees change constantly — check current deals, or speak to a regulated mortgage broker.