Calculate the true saving from remortgaging: monthly cash flow saving, annual saving, total saving over the new fix period, and how many months the product fee takes to pay back. The calculator uses proper repayment-mortgage amortisation so the figures match what you'd actually pay each month, not just the simple interest difference.

How the calculation works

The calculator runs three steps:

1. Old monthly payment: Standard repayment amortisation formula using current balance, current rate, remaining term.
2. New monthly payment: Same formula with new rate (term stays the same).
3. Saving: Old payment minus new payment, multiplied across the fix period for the total saving.

The amortisation formula: P = L × r × (1+r)^n ÷ ((1+r)^n − 1), where L = loan amount, r = monthly rate (annual rate ÷ 12), n = total number of monthly payments. The calculator uses the precise figure rather than the simple interest approximation.

Worked example 1 — typical 1pp rate drop

Outstanding balance £200,000, current rate 5.49%, new rate 4.49%, remaining term 22 years, product fee £999, new fix 5 years.

• Old monthly payment: £1,378
• New monthly payment: £1,265
• Monthly saving: £113
• Annual saving: £1,356
• 5-year total saving: £6,780
• Fee payback: 9 months (£999 ÷ £113)
• Net saving over 5 years (after fee): £5,781

Worked example 2 — modest rate drop

Outstanding balance £180,000, current rate 4.89%, new rate 4.59%, remaining term 18 years, product fee £1,499, new fix 5 years.

• Old monthly payment: £1,267
• New monthly payment: £1,236
• Monthly saving: £31
• Annual saving: £372
• 5-year total saving: £1,860
• Fee payback: 49 months (4 years)
• Net saving over 5 years (after fee): £361

Marginal — the fee almost wipes out the saving. Better to look for a no-fee or lower-fee product, even at a slightly higher rate.

Worked example 3 — big rate drop on a large mortgage

Outstanding balance £400,000, current rate 5.79%, new rate 4.29%, remaining term 25 years, product fee £1,999, new fix 5 years.

• Old monthly payment: £2,524
• New monthly payment: £2,170
• Monthly saving: £354
• Annual saving: £4,248
• 5-year total saving: £21,240
• Fee payback: 6 months
• Net saving over 5 years (after fee): £19,241

Worked example 4 — small balance, marginal saving

Outstanding balance £75,000, current rate 5.19%, new rate 4.49%, remaining term 15 years, product fee £999, new fix 2 years.

• Old monthly payment: £600
• New monthly payment: £574
• Monthly saving: £26
• Annual saving: £312
• 2-year total saving: £624
• Fee payback: 38 months
• Net saving over 2-year fix (after fee): −£375 (LOSS)

Don't switch in this scenario. Either find a fee-free product at a similar rate, or take a longer fix to spread the fee over more months of saving.

Savings strategies

Pick the right fix length

The longer your fix, the more months your saving has to outweigh the fee. 5-year fixes turn marginal-saving scenarios into clear winners. 2-year fixes only work for big rate drops or low fees.

Choose the right product fee model

Compare three options at the same lender:

• Low rate + high fee (£1,999)
• Mid rate + low fee (£999)
• Higher rate + no fee

Run all three through the calculator. The right answer depends on your balance — bigger balances benefit more from low rates even with high fees because the rate saving compounds across more capital.

Pay fee upfront vs add to loan

Adding £1,500 to a £200k mortgage at 4.5% over 25 years adds about £8/month and £945 of total interest over the term. If your monthly saving is meaningfully larger than that £8/month ongoing cost, adding the fee is fine. Cash-rich households are generally better off paying upfront.

Don't shorten the term unless deliberate

Some lenders default to keeping the term the same, others to shortening it to the original payoff date. Keep the term the same to compare apples-to-apples. Shortening the term separately is a different decision (lower total interest but higher monthly cost).

Common misuse of the calculator

Using headline rates without checking your eligibility

Headline rates assume best-case LTV and credit. Use your AIP rate or broker quote, not a comparison-site headline rate.

Ignoring legal and exit fees

The calculator focuses on the product fee. Add exit fee (£75-£295) and any legal cost (£0-£600) to the total cost side when deciding.

Not factoring in ERC for breaking early

The calculator assumes you remortgage at fix end. If you're considering breaking early, separately calculate ERC (1-5% of balance depending on fix year) and add to the total cost.

Comparing different term lengths

A 25-year remortgage will have a lower monthly payment than a 22-year remortgage at the same rate — but pays more total interest. The calculator assumes term stays the same, which is the right comparison.

When the calculator says "not worth it"

Three scenarios where remortgaging isn't worth it despite apparent savings:

1. Net saving over fix is negative. The fee eats more than the saving. Stay on existing product or product transfer.
2. Fee payback is longer than the fix. You'd pay the fee but never recover it before re-remortgaging.
3. Monthly saving is under £25 and you have any time on SVR before completion. SVR-month penalty eats years of saving.

Decisions the calculator doesn't make for you

Whether the new rate is realistic

Use AIP rates or broker quotes — comparison site headline rates assume best-case LTV and credit profile that may not match yours. See the AIP guide for the lender's view.

Whether you'll qualify with a new lender

Switching lenders triggers a full affordability check and hard credit search. If your circumstances have weakened, product transfer with your existing lender is the safer route. See remortgage guide for the product-transfer-vs-switch framework.

Whether your fix end timing works

Aim to complete the remortgage on the day your fix ends — no ERC, no SVR. See when to remortgage for the timing framework.

Whether other fees apply

The calculator focuses on product fee. Real total cost includes exit fee from current lender (£75-£295), legal fees (£0-£600), and ERC if breaking early. See remortgage costs explained for all 7 cost categories.

Beyond pure saving: other reasons to remortgage

The calculator focuses on rate-driven savings. Other valid reasons to remortgage that aren't pure cost:

• Release equity for home improvements, debt consolidation, or deposit elsewhere
• Change mortgage type (repayment ↔ interest-only)
• Shorten the term to accelerate payoff
• Add or remove a borrower (after separation, marriage, or adding a co-buyer)
• Switch to a lender with better service if your existing lender is causing administrative problems

The 12-month remortgage planner

Month before fix ends	Action
-12	Note fix end date in calendar; check current balance and rate
-9	Check current credit file; ensure electoral roll up to date
-6	Get AIP quotes from 2-3 lenders via broker; run calculator on each
-5	Submit full application with chosen lender
-4	Receive mortgage offer; valid 6 months
-3	Enter no-ERC window; instruct conveyancer
-2 to 0	Conveyancing progresses; arrange completion date to coincide with fix end
0	Completion. Old mortgage repaid, new fix begins.

Saving sensitivity by mortgage size

A given rate drop has very different absolute savings depending on outstanding balance. Quick reference at typical 25-year remaining term:

Balance	0.5pp drop	1.0pp drop	1.5pp drop	2.0pp drop
£100,000	£25/mo	£50/mo	£75/mo	£100/mo
£200,000	£55/mo	£110/mo	£165/mo	£220/mo
£300,000	£80/mo	£165/mo	£245/mo	£325/mo
£500,000	£130/mo	£275/mo	£410/mo	£545/mo
£750,000	£200/mo	£410/mo	£620/mo	£820/mo

Approximate figures (uses simple interest on outstanding balance). Use the calculator above for exact amortised figures.

How fee-payback period scales with savings

Fee payback in months is fee ÷ monthly saving. Quick reference for a £999 product fee:

Monthly saving	Payback period
£25	40 months (3.3 years)
£50	20 months
£75	14 months
£100	10 months
£150	7 months
£200	5 months
£300	4 months

Same reference for a £1,999 product fee:

Monthly saving	Payback period
£25	80 months (6.7 years)
£50	40 months
£75	27 months
£100	20 months
£150	13 months
£200	10 months
£300	7 months

Rule of thumb: if fee payback is longer than your new fix period, the fee outweighs the saving for that fix. Choose a lower-fee or no-fee alternative even at a slightly higher rate.

Interest-only vs repayment in the calculator

The calculator's amortisation maths assumes a repayment mortgage (capital + interest paid down each month). For interest-only mortgages, the saving calculation is simpler:

monthly saving = balance × (old rate − new rate) ÷ 1200

Worked example: £400,000 interest-only mortgage at 5% becoming 4%. Saving = 400,000 × 1 ÷ 1200 = £333/month. Over a 5-year fix that's £20,000 saved.

Interest-only savings are typically larger in absolute terms because the full balance is exposed to the rate (no capital repayment offset). Note: interest-only requires a credible repayment plan and is restricted for residential buyers (BTL is the common interest-only context).

The compounding view: 25-year savings horizon

Over a full 25-year mortgage life with multiple remortgage windows, consistent rate optimisation compounds materially. Worked scenario: £200,000 mortgage, 25 years, average 0.5pp rate improvement at each 5-year remortgage (5 remortgages):

• Average monthly saving across all years: ~£60
• Total saved across 25 years: ~£18,000
• Saved interest: ~£12,000 (because principal repays faster too)

The single highest-leverage financial discipline UK homeowners can adopt is the 6-month diary check on every fix end. Done well across a 25-year mortgage life, it adds up to a small car's worth of net wealth.

Frequently asked questions

How does the remortgage savings calculator work?

You enter balance, current rate, new rate, remaining term, product fee. The calculator computes existing monthly payment, new monthly payment, monthly/annual/total saving, and fee payback period.

Should I add the product fee to my mortgage?

Depends on saving vs fee. Adding £1,500 to a 25-year mortgage at 5% adds ~£8.77/month interest cost. If monthly saving meaningfully bigger, adding fee makes sense.

What's the fee payback period?

Product fee ÷ monthly saving. £999 fee at £60/month saving = 16.7 months. If new fix is shorter than payback, fee outweighs saving.

Is the saving really worth it?

Under £30/month rarely justifies a full switch. £30-£75/month borderline. £75+/month almost always worth switching even with higher fee.

Does the calculator account for early repayment charges?

No — assumes remortgage at fix end (no ERC). For breaking early, separately calculate ERC (1-5% of balance) and compare against saving over remaining fix.

What rates should I assume for the new mortgage?

Use rate from recent AIP or broker quote — not headline rate from comparison sites. AIP rates reflect lender appetite for your specific LTV and credit profile.

Does the saving include capital repayment?

Yes — uses full repayment mortgage maths. For interest-only mortgages, saving is purely interest difference: balance × (old rate − new rate) ÷ 12.

Should I focus on monthly saving or total saving?

Monthly saving matters for cash flow now. Total saving matters for net wealth. Use monthly for affordability, total (minus fees) for the 'is it worth it' decision.

Term-length sensitivity

The remaining term affects how much each rate basis point translates into monthly saving. Quick reference for a £200,000 balance at a 1pp rate drop (e.g. 5% to 4%):

Remaining term	Monthly saving
10 years	£85
15 years	£100
20 years	£110
25 years	£115
30 years	£120

Counter-intuitive at first glance: longer remaining term = slightly more monthly saving. The reason is that longer terms have more of the payment as interest (which the rate drop affects) vs capital (which it doesn't). The compounding effect across the full remaining term, though, makes longer-term saves smaller as a total interest figure than the simple linear extrapolation suggests.

Edge cases the calculator handles

The calculator handles:

• Zero rate scenarios: Returns linear-decline payment (rare but happens at very low base rates)
• Negative saving: When new rate is higher than current (shown as negative result — useful for sense-checking proposed deals)
• Zero product fee: Payback period is "Immediate (no fee)" — useful for product-transfer scenarios
• Very short remaining term: Monthly saving still computed accurately; total over fix may be limited if term is shorter than fix length

What the calculator does NOT factor in

• Inflation: All figures are in nominal pounds today.
• Capital reduction over the fix: Outstanding balance reduces month by month. Calculator uses opening balance throughout.
• Tax implications: Negligible for owner-occupier mortgages; relevant for BTL where mortgage interest tax relief differs.
• Risk of being declined: The calculator assumes you'll qualify for the new product. Affordability and credit are separate considerations.
• Property value changes: A material value drop would push you into a higher LTV band and potentially a higher rate.

Related guides

Final readiness check before pressing apply

Before committing to a new mortgage based on the calculator output, sense-check these five items:

• Is the new rate quoted realistic for your LTV and credit? Use AIP rates, not comparison-site headlines.
• Is the timing aligned to fix end? Avoid any time on SVR — a single SVR month wipes out months of saving.
• Have you compared product-fee variants at the same lender? Low-fee, mid-fee, and no-fee options give different total costs.
• Are there other costs (exit, legal, broker) not in the calculator? Add £200-£900 of additional costs depending on product structure.
• Will your affordability still pass at the new lender? A product transfer skips this; a switch doesn't.

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Last reviewed: 21 June 2026.