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Around 1.5 million homeowners are due to remortgage this year, and many will face higher rates than before.
Mortgage rates have dipped since last summer but remain high. Borrowers remortgaging at the end of a two-year fixed-rate deal might be able to get a slightly cheaper deal, but those coming off five-year fixed rates will see their repayments rise significantly.
Here, we explain what's happening in the mortgage market and provide a step-by-step guide to getting a good deal when remortgaging.
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Thirteen consecutive increases in the Bank of England's base rate brought about higher costs for lenders and borrowers.
However, mortgage rates are now starting to fall, with the Bank of England cutting the base rate twice so far this year. The base rate is currently 4.25%.
The graph shows how average mortgage rates have changed over the past two years. Average rates jumped up slightly throughout January, but since then they have been on a downward trajectory.
Source: Moneyfacts
Borrowers remortgaging at the end of a two-year fixed-rate deal might be able to get a slightly cheaper deal. The average rate of a two-year fixed-rate mortgage in May 2023 was 5.26%, but it's now 5.18%.
However, those coming off five-year fixed rates are likely to see their repayments rise significantly. In May 2020, the average five-year fixed rate was 2.35%, compared with 5.1% now.
If you're coming to the end of your fixed-term mortgage, the best thing to do will depend on your situation.
If you're worried about being able to make your mortgage payments, your lender may be able to offer you support – it's best to contact it before missing any payments.
Higher mortgage rates are – at the moment – a fact of life, but there are some steps you can take to ensure you get the best possible deal when switching. Here are our top tips:
Most homeowners have a fixed-rate mortgage. This means your rate and monthly repayments stay the same for a set amount of time (usually two or five years).
It's important to check when your fixed term is due to expire. If you don't remortgage by then, you'll be moved on to your lender's standard variable rate (SVR).
Being on an SVR is usually more expensive and leaves you exposed to rate increases at any time, so you could face much higher monthly repayments if you fail to switch. The average SVR offered by the UK's main mortgage providers is 7.58%.
With high rates likely to remain in the short term, it can be tempting to remortgage early.
In most cases, however, this isn't the best idea. If you remortgage during your fixed term, you'll need to pay charges to your lender. This, when combined with arrangement fees for a new mortgage, will likely override any financial benefits of switching.
The monthly repayments you've been making may have moved you into a lower loan-to-value (LTV) bracket, which could help you get a cheaper rate.
For example, if you took out a 90% mortgage two years ago, you'll now own more of the property, so you may be able to remortgage at 85% loan-to-value.
You might also be able to benefit from house price changes. The market has been picking up over the past year, so the value of your home may have increased since you last remortgaged, which could lower your LTV bracket. Lenders will usually conduct a remortgage valuation to determine the property's current value.
To find out your current LTV, divide the amount you still owe by the amount the property is currently worth, and multiply by 100.
So if you owe £125,000 and the property is worth £150,000, (125,000/150,000) x 100 = 83% LTV.
Remortgaging with your current lender is called a product transfer. There are some benefits to doing this: you won't need a new credit check or a valuation, and you may be able to avoid expensive arrangement fees.
On the other hand, with dozens of lenders competing to offer the best mortgage deals, it's highly unlikely that your current one will give you the very cheapest rate.
You should be able to find out your product transfer rate by logging in to your online mortgage account.
If it's not there, be proactive and give your bank a call. If you wait to receive a letter, you might miss out on a better deal elsewhere.
You can usually arrange a new mortgage up to six months before the end of your fixed term.
To get an idea of the best rates currently available, check out our guide to the cheapest mortgage deals. For more tailored advice suited to your specific circumstances, speak to a mortgage broker.
Some mortgage deals currently have a shorter shelf life than before. So if you find one you definitely want, it might be a good idea to secure it in advance.
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Two and five-year fixes are the most common types of mortgage, although three, seven and 10-year fixed terms are available, too.
It's best to opt for a term that suits your circumstances. A two-year fix will give you flexibility to switch sooner if rates fall, but a five-year fix will protect you for longer if they rise.
Despite being more expensive, two-year fixes are currently proving to be more popular, as borrowers are gambling interest rates will be lower come mid-2026.
Think about your medium-term plans. If you're planning on staying put in your current home, a five-year fix will offer greater stability. If you might look to move, however, a two-year fix will offer flexibility and eliminate the possibility of incurring early repayment charges.
If you're undecided between a short or longer-term fix, you could always go down the middle and opt for a three-year term.
When comparing mortgage deals, don't just focus on the initial rate.
Upfront fees can have a significant impact on the overall amount you'll pay. Some mortgages are offered fee-free, while others come with fees well over £1,000. In some cases, a more expensive fee-free deal can be cheaper.
You may find it a struggle to get accepted for a new deal when you come to remortgage – this will usually be the case if you fail stricter affordability tests brought in after you bought your home.
Some of the most common reasons for failing affordability tests include having a drop in income, being self-employed, having a poor credit rating and going into negative equity. But there are steps you can take if you've been turned down for a mortgage or remortgage.
Bear in mind that if you don't take action, you'll be put onto your mortgage provider's SVR. These tariffs tend to be significantly higher than the rates on other types of mortgages.
Speaking to a qualified adviser can help you understand why you may have been turned down for your mortgage and help you plan what to do to get accepted.
This can include checking over your application for any mistakes or missing information, as well as steps to help you pay off any debts and improve your credit score.
There's no guarantee you'll get the best deal with your current provider, so shop around – just make sure you don't end up with multiple 'hard' credit checks, as this could negatively impact your credit score.
If you've spoken to an adviser and still can't decipher why your application was rejected, you can appeal the provider's decision.
This process tends to be complex and may not be the best course of action unless there was an error on your application. Otherwise, an appeal is unlikely to change the outcome of the lender's decision. You should therefore only consider this option if you know there was important information that wasn't considered by your lender.
This story was first published on 11 August 2022. It was last updated on 12 May 2025.
