Should I Remortgage Now and Get a Better Deal?

Considering a remortgage can be a great way to save money, but it's essential to weigh the pros and cons before making a decision.

If you're currently on a fixed-rate mortgage, you might be wondering if it's time to switch to a better deal. According to the article, the average fixed-rate mortgage term is 5-10 years, and if you're nearing the end of this period, it's worth exploring your options.

A better deal might be just around the corner, with some lenders offering rates up to 1.5% lower than your current mortgage. However, these deals often come with conditions, such as higher fees or stricter repayment terms.

The key is to assess your financial situation and determine whether a remortgage will genuinely save you money in the long run.

For another approach, see: 5 Weeks

Remortgaging can be a complex decision, but let's break down the pros and cons to help you make an informed choice.

Securing a lower rate can be worth paying the Early Repayment Charge, bringing peace of mind for some.

Remortgaging early can incur fees, so it's essential to weigh up which decision will save you the most money in the long run. This involves considering the Early Repayment Charge and comparing it to the potential savings from securing a lower rate.

Unfortunately, with mortgage rates, there's no crystal ball to predict whether things will settle down or not, making it a turbulent time.

Seeking advice from an independent, qualified, regulated adviser can be invaluable, as they can run the numbers for you and explain them in real-life terms.

You have several options to consider when deciding whether to remortgage, including switching to a new lender, extending your current mortgage term, or overpaying your mortgage.

Switching to a new lender can be a good option if you can get a better interest rate or more favorable terms. According to the article, some lenders offer fixed rates as low as 1.5% for a 2-year term.

Extending your current mortgage term can also be a viable option, but be aware that you'll pay more in interest over the life of the loan.

If you're coming off a cheap 5 year fix, you might be in for a shock when your rate increases. The average 5 year fixed rate mortgage in March 2025 was 4.69%, significantly higher than the average 5 year fixed rate mortgage in March 2020 of 2.74%.

Borrowing £200,000 over 25 years will cost you £1,133 per month at the new rate, compared to £922 per month at the old rate. That's an extra £211 per month.

If you don't remortgage and move to your lender's standard variable rate, you'll be paying £1,542 per month, a whopping £620 more than you would be paying at the new fixed rate.

On the other hand, if you're coming off a 2 year fix, the good news is that mortgage rates are now lower than 2 years ago. The average 2 year fixed rate mortgage in March 2025 was 4.87%, compared to 5.32% in March 2023.

Consider reading: 2 Months

Borrowing £200,000 over 25 years will cost you £1,154 per month at the new rate, compared to £1,207 per month at the old rate. That's a saving of £53 per month.

Here's a summary of the costs:

It's clear that remortgaging can make a big difference to your monthly mortgage payments.

Securing a lower rate can be worth paying the Early Repayment Charge, but it's essential to weigh up which decision will save you the most money in the long run.

It's a numbers-based approach, considering the fees that would be incurred should you remortgage early.

We've seen clients approach us before the 6 month mark to see whether it's worth remortgaging now or waiting.

Our advisers will review the deal should anything cheaper come onto the market, without charging an additional fee.

Unfortunately, we don't have a crystal ball to see whether mortgage rates will settle down or not, making it a turbulent time.

Seeking advice from an independent, qualified, regulated adviser is worth its weight in gold, especially during this time.

Expand your knowledge: Is It Good Time to Refinance Your Home

UK mortgage rates have been on a rollercoaster ride since 2021, with a sharp spike in September 2022 after Liz Truss's mini-budget. They've been trending down since then, but experts warn that rates may get worse before they improve.

The Bank of England made its first base rate cut in August 2024, reducing it from 5.25% to 5%, and a second cut in November 2024 took it to 4.75%. However, mortgage rates actually increased in November 2024 as markets reacted to the potential for interest rates to stay higher for longer.

In December 2024, mortgage rates fell despite the Bank of England holding interest rates at 4.75%. But the New Year started with a mixed bag of moves from mortgage lenders, with some reducing rates and others increasing them.

Despite the latest inflation figures showing a surprise drop, experts are warning that mortgage rates may not reach the all-time lows we experienced in the past few years. As one executive put it, rates of 1-2% are things of the past and should not be something that people hold out for in the future.

For your interest: First Direct Remortgage Rates

Here are some key mortgage rate movements to keep in mind:

Now is a wise time to remortgage and lock in a new rate, with the support of a mortgage adviser, you can lock in a rate now and hold on to the offer for up to 6 months to test the market and switch to a lower rate, should it become available – allowing you to hedge your bets against any market fluctuations.

Your current financial situation plays a big role in deciding whether to remortgage now or wait. If you're planning to stay in your home for a long time, it might be worth considering refinancing to save on interest.

The length of stay is a key factor to consider, as it affects the potential savings from refinancing. For example, if you plan to stay in your home for less than 5 years, it might not be worth refinancing, even if interest rates are low.

A fresh viewpoint: Remortgage for Home Improvements

Your loan term is also important to think about. Shortening your mortgage loan term can help you save on interest, but extending it may lower your payments but increase the total interest paid.

You should also consider your future life changes, such as retirement, which could impact your future income and qualifying ability. If you're expecting a significant change in income, it might be best to wait until then to refinance.

Market timing is another crucial factor to consider. Weigh the risks of waiting for potentially lower rates against current savings opportunities. If rates are expected to rise, it might be better to refinance now.

Here are some key factors to consider before refinancing:

Your current interest rate and the rate you initially secured also determine whether refinancing is the right move. If you're currently paying a high interest rate, it might be worth refinancing to a lower rate, even if it means paying an early repayment fee.

If your current mortgage deal ends in the next 6 months, it's best to start the remortgage process now. This is because locking in a rate now allows you to keep it under review to see if a better deal comes up before you switch to your new deal.

Early repayment charges can be a significant factor in deciding whether to remortgage now or wait. These charges can be incurred if you exit your current deal early, so it's essential to weigh up the costs against the potential savings of a lower rate.

Award-winning mortgage brokers L&C offer a free Rate-Check service, which can help you make an informed decision. This service allows you to review your current rate and see if a better deal is available without committing to a new deal.

Securing a lower rate can bring peace of mind, even if it means paying an early repayment charge. However, waiting to see what deals are available 6 months prior to the end of your deal may be a more cost-effective option.

It's impossible to predict with certainty whether mortgage rates will go up or down, so it's essential to seek advice from an independent, qualified, regulated adviser. They can help you understand the numbers and make a decision that's right for you.

Recommended read: 9 Months