Apparently hundreds of thousands of Brits don’t ever switch [1] their mortgage. This is despite the fact that staying on an old deal instead of remortgaging promptly can be horribly expensive.
And I don’t mean ‘splurging on a fancy lunch’ expensive, either. More like ‘buying a brand new VW Golf and driving it straight into the sea’ expensive. Even delaying remortgaging by just a couple of months could cost you the same as a family holiday.
As a Monevator reader, you presumably don’t enjoy setting tenners on fire!
Interest rates can change very rapidly. 2026 began with mortgage rates creeping down, and so any delay in remortgaging didn’t matter much.
However in the past month or so, ‘politics’ has caused mortgage rates to spike. The difference in interest payable between someone who locked in a mortgage rate early and someone who is just getting around to it could be pretty chunky.
So what’s to be done?
Planning ahead to find a good new deal before your old mortgage expires is obviously ideal. But even if the end of your deal is fast approaching – or it’s passed already – you can still take some of the sting out of recent rate rises.
How mortgages catch people out
In some countries, all mortgages are fixed products. You take out a 30-year mortgage at a 5% interest rate, and if you do nothing else then you pay that 5% interest for 30 years.
Job done.
But in the UK? Not so. Though fintech start-ups [2] occasionally tout fixed-for-life mortgages as the future, the idea still hasn’t caught on.
Instead, many of us buy mortgages the same way we get our broadband. We find a good deal for the first few years, and then when we’ve stopped paying attention our charges are whacked up.
Sure, a bank will reel you in with an attractive 3.5% fixed rate. But that rate won’t last more than a few years before it shoves you on to what they call the Standard Variable Rate (SVR).
Which perhaps we should rename the SVR the ‘Seriously Villainous Rate’ – because despite the Bank of England’s Bank Rate being just 3.75% as I type, the SVR at some lenders exceeds 8%!
Now, that SVR will rise and fall with Bank Rate. So even on an SVR you might see your repayments fall.
You might also ask: do a few percentage points really matter in the grand scheme of things, anyway?
Well, yes, when you’re borrowing hundreds of thousands of pounds. Small differences add up.
The cost of higher rates can be colossal
Let’s meet Bill.
Bill is a smart guy. He gets his favourite craft beer delivered. It’s cheaper and better that way than the pub. Bill also loves trading stocks on his phone. He thinks he’s pretty savvy.
But Bill spends all day in meetings and on calls, so he doesn’t really want to deal with more admin when he gets home. He’s not sure where ‘sort out the mortgage’ comes on his To Do list – but it’s definitely below ‘veg out on the sofa with an Uber Eats and Young Sherlock.’
Back when he bought his house, Bill borrowed £750,000 over 25 years on a two-year fixed rate deal. (Yes it’s a lot of money. Bill works in London and he likes a garden. It’s expensive out there.)
- For the first two years, at 3.5% interest, Bill repaid £3,755 per month.
But recently, Bill has seen a couple of emails from his bank that hasn’t got round to reading…
…and wham, bam, now he’s paying 8% as his fixed rate deal expires and he drops onto the bank’s SVR.
- Bill’s bank will draw £5,789 from his account next month. And he’ll continue to pay £2,034 extra every single month on his mortgage until he sorts it out.
That’s enough to buy a new car over a full year. And this is just to service the higher interest cost, remember – Bill is not paying off his mortgage any faster.
Delaying remortgaging by just a few months is bad enough
We can all see how this should go.
You’re switched on about your mortgage options. So six months before your cheap rate expires, you’re already looking out for deals. Perhaps you’ve got a mortgage broker on the case, too.
The result: everything is sorted ahead before the deadline, and neatly tied with a bow.
But what if that doesn’t happen? Or if life took over for a while, and you find yourself in Bill’s situation?
Perhaps you’ve been dealing with a sick relative, or trying to dig your way out of some nightmare at work? You know the mortgage needs to be sorted. But you’ll get to it when you’re ready.
Most people would think that’s a reasonable decision during a stressful time.
But let’s go back to Bill’s £750,000 mortgage and look at a few potential increases when on an SVR:
| Initial Rate | SVR | Repayments (Initial Rate) |
Repayments (SVR) |
Monthly Increase |
| 3.50% | 8% | £3,755 | £5,789 | £2,034 |
| 3.75% | 8% | £3,856 | £5,789 | £1,933 |
| 4.00% | 8% | £3,959 | £5,789 | £1,830 |
| 4.25% | 8% | £4,063 | £5,789 | £1,726 |
| 4.50% | 8% | £4,169 | £5,789 | £1,620 |
Even when you start on a higher initial rate of 4.5%, that SVR hike still stings.
It’s the definition of paying money for nothing.
Switched on
I understand why most ‘switch to save money’ messages get drowned out amid the noise of daily life.
Even I’m not very motivated to pocket an extra 20p by switching to a different brand of baked beans.
But given that being just a month late with your mortgage switch could cost you a four-figure sum, I’d say this is one opportunity to keep track of.
Wealth warning Mortgages are big and complex and mistakes can involve life-changing sums of money. Seek professional advice if you need it. For instance from an FCA-regulated mortgage broker. Some brokers may charge a fee, but others will not charge you and instead get a commission from the lender.
Why doesn’t everybody switch?
If it’s such a no-brainer to switch, then why do hundreds of thousands of people routinely pay the SVR?
Perhaps some customers just don’t know any better. They haven’t realised they can switch to another lender. After all, they took out a 25-year mortgage, and their bank probably won’t fall over itself to tell them how to reduce their interest payments.
For other people, remortgaging is just on the back burner. Something to deal with when life is quieter.
Maybe people believe that they owe so little that there’s no point in remortgaging? That’s a personal decision, but it’s worth knowing that various lenders do offer mortgages for very small sums. Barclays and TSB, for example, offer mortgages for as little as £5,000.
People might also have seen their financial situation change for the worse. For example, they lose their job. It could be impossible to move to a new lender.
Even so, in the vast majority of cases, people can still remortgage onto a new deal with their existing lender. 1 [3]
In all these cases, it can’t hurt to ask a broker what your options are to get you off the SVR and onto a more competitive deal.
Remortgaging takes time
If you’re switching to a new lender, there is legal paperwork that takes its sweet time to resolve.
For starters the new lender probably wants to make sure that the house they’re lending against actually has four walls and a door. Perhaps they also want to verify you have an income to pay them back.
They’ll also want to get their name recorded with the Land Registry so you can’t sell the house and flee to the airport with a suitcase full of cash.
So it can take several weeks to switch mortgages. Even if you’re fairly on top of things, you might end up on the SVR for a period.
I once spent a month on the SVR simply because the solicitors took so long to process the paperwork.
Thankfully – after a fairly stuffy email to their complaints department – the solicitors coughed back up the additional interest I’d incurred. But it was hardly ideal.
If you do want to play the field with different lenders, get the ball rolling early on. Six months before your deal expires is recommended. That gives you three months or so for the legal gremlins to sort themselves out after you’ve made your decision.
If you haven’t got that much time
What if you’ve already found yourself on a SVR? Or you will be on one in a few weeks’ time?
Trying to tie down the best possible deal from a range of lenders could see you paying bucketloads of interest on that higher SVR whilst you wait for the cogs to slowly turn.
Instead the quickest solution, generally, is to swap to a new deal with your existing lender, typically via what is known as a ‘product transfer’.
Your current bank won’t need mountains of new legal paperwork. They validated your financials when they first offered you a mortgage.
According to an expert writing recently in the Financial Times [4]:
…the product transfer [has] come into its own since the pandemic.
In 2006, when there was a far smaller proportion of fixed-term deals, there were 1.14mn remortgages. Last year, there were 320,000 remortgages – and over 1.54mn product transfers.
Rather than borrowers being left to drop on to typically much higher revert-to rates or arranging a remortgage, they are now incentivised to transfer to a new fixed rate with their existing lender.
The main benefit is that you don’t need to pass any additional affordability tests – which can be tricky, given the higher interest rates, and the fact that high house prices and stricter lending criteria mean buyers’ finances are typically stretched to begin with.
The downside? It might not be the cheapest mortgage offer you could get.
Another option is to again quickly switch to a new mortgage with your existing provider, but then to start that longer process of looking at other lenders.
Your current lender probably won’t appreciate you setting up a mortgage that you’ll ditch in a few months, but hey ho. That’s their problem, not yours.
Although…you’ll need to be wary of Early Repayment Charges (ERCs).
The too-early bird gets a worm
ERCs are used by banks to stop their customers playing both sides.
If you could take out a fixed rate mortgage, see rates drop, and then switch to a lower rate elsewhere, your original lender wouldn’t make the profit it anticipated when it originally offered you a mortgage.
So on some products (especially fixed rates) you’ll incur percentage-based charges for paying off the mortgage early. However there are plenty of mortgage deals around that don’t come with such penalties.
If you switch from your SVR to a cheaper product with no ERC, then you’ve dealt with the sky-high SVR. Now you can scour the market for the very cheapest deal at your leisure.
And when the time comes to move to your new lender, your ‘No ERC’ mortgage can be settled without incurring thousands in penalty charges.
Don’t let product fees stop you
You might now be thinking, “but a new deal will come with a £999 product fee!”
And sure, some do.
But using this as a reason to delay switching might not make much financial sense. You could be incurring thousands of pounds in extra interest just to avoid a £999 fee.
What’s more, there are plenty of mortgages out there with no or negligible upfront fees. The trade-off typically being a higher mortgage rate.
In some cases, such no-fee deals are your best option – especially if you’re only planning to pay that higher rate for a few months.
Brokers can advise you on all of these scenarios and figure out which will ultimately be cheapest. Though if you are thinking of making two switches, it’s worth mentioning this to them from the get-go.
Remortgaging when you have plenty of time
There are some considerations for people with more time to think about, too. For one thing, the government’s Mortgage Charter [5] remains active – for the 49 lenders that signed up to it, anyway.
(What do you mean you never heard of the mortgage charter?)
For our purposes when remortgaging, one important aspect of the charter is it says customers can lock-in a new deal up to six months before their fixed rate deal ends.
Until very recently, mortgage rates were gradually easing down. Hence this flexibility wasn’t really a big deal. But now, with mortgage rates flying up [6], securing a ‘good for now’ rate ASAP has become another key weapon in your money-saving arsenal.
If the market moves in the following months and a better deal becomes available, you can swap to that better deal. Hence this way you’re protected against rates rising in the final three to six months of your deal’s term, but you’ve got a backstop to avoid landing on the SVR if something changes in the meantime.
With lots of time to spare you can also consider whether you want to work directly with a lender’s advisers, or go with an independent broker.
Personally – after a two-hour grilling from a building society about when I might be replacing my sofa and endless questions about obscure items on payslips – I’d pick the broker every time.
At least when my broker rants about how idiotic the underwriters at my bank are, he’s the one that spent hours bashing his head against the wall, not me.
A remortgaging checklist
Given that being a couple of months late to remortgaging might cost more than your summer holiday, I think it’s fair to suggest we should all plan ahead.
Here’s the steps to take:
- Check the expiry date of your mortgage’s initial rate. Put it in the calendar or write it on the kitchen wall.
- Don’t wait for your lender to nudge you. Get the ball rolling six months ahead of the expiry date.
- Approach your lender or a broker. See what deals you can lock in now, and check any penalties for cancelling.
- Remember to re-check. Make sure there isn’t a better deal out there as the switch date approaches.
- If you’re particularly keen, continue to recheck every few months or annually. Consider any fees you’d pay for settling the mortgage early – those ERC penalties – if better rates emerge.
And if you’re reading this on an SVR, then don’t delay getting onto a new deal. Get on your phone and start making calls! I’m sure your bank will keep making money without your help.