Monthly Saving
£458
Current payment £1,250 → new payment £792
Cumulative Saving vs Switch Cost
Illustrative only. Assumes both deals are on the same repayment type and balance for the remaining term. Doesn't include product-specific incentives (cashback, free legals) some lenders offer. Not financial advice.
What This Calculator Does
This tool compares your current mortgage deal against a new one and works out whether the switch actually pays for itself — not just whether the new rate is lower, but whether the monthly saving clears the early repayment charge and new deal fees before your new fixed term ends.
Enter your outstanding balance, remaining term, and current rate, then the rate you're being offered. Add the exit fee from your current lender and the combined arrangement/legal/valuation fees for the new deal — the calculator finds the exact month the switch breaks even.
How the Calculation Works
Monthly saving = current monthly payment − new monthly payment, calculated on the same outstanding balance and remaining term for both rates so the comparison isolates the rate difference alone.
Total switch cost = early repayment charge (ERC) + new deal fees (arrangement, legal, valuation). Break-even month = total switch cost ÷ monthly saving — the point at which cumulative savings equal what you paid to switch.
The switch is only clearly worth it if the break-even point falls before your new fixed term ends — if you'd remortgage again anyway at the end of a 2-year fix, a 30-month break-even means you never actually recover the cost before you're back on the market.
Worked Example
An interest-only mortgage with a £200,000 balance, currently on a 7.50% reverted rate, offered a new 5-year fix at 4.75%.
- Outstanding balance: £200,000 (interest-only)
- Current payment: £200,000 × 7.50% ÷ 12 = £1,250/month
- New payment: £200,000 × 4.75% ÷ 12 = £791.67/month
- Monthly saving: £458.33
- Switch costs: £2,000 ERC + £1,500 fees = £3,500
- Break-even: £3,500 ÷ £458.33 ≈ 8 months
With 8 months to break even against a 5-year (60-month) new fixed term, the switch clears its own cost with 52 months to spare — a net position of roughly £24,000 better off by the end of the new fix.
Frequently Asked Questions
Is it always worth remortgaging to a lower rate?
Not automatically. A lower rate only helps once the monthly saving has paid back the ERC and new deal fees — if you're likely to move, sell, or remortgage again before the break-even month, the switch can cost you more than it saves. Always check the break-even point against how long you actually intend to keep the new deal.
What counts as a switch cost besides the ERC?
Arrangement fees, legal fees, and valuation fees are the main ones — some lenders bundle these, others itemise them. Product transfer fees or broker fees, if you're using one, should also be added to the total switch cost for an accurate comparison.
Should I remortgage before my fixed deal ends?
Most UK lenders let you lock in a new rate 3–6 months before your current fix ends without paying an ERC, since you haven't technically exited early. Check your current deal's ERC schedule — many are tapered (e.g. 5% in year 1, falling to 1% in year 5) and it's often cheapest to wait until the ERC drops or your fix naturally ends.
Does this work for buy-to-let mortgages?
Yes — the mechanics are identical, though buy-to-let deals are more commonly interest-only (the default assumption here), and rental income affordability rules may limit which new deals you actually qualify for regardless of what the numbers suggest.
What if my current deal has no ERC?
If you're on a tracker, your lender's standard variable rate, or past the ERC period of a fixed deal, set the ERC slider to £0 — the break-even point then depends only on the new deal fees, which usually pays back in a month or two.