A remortgage involves replacing your existing home loan with a new one. This is typically done to secure a better interest rate, change your loan term, or access equity. This calculator helps you estimate the potential financial impact of remortgaging by comparing your current mortgage's monthly payment with the projected payment of a new mortgage.
How the Calculator Works
The calculator uses the standard mortgage payment formula to determine the monthly payment for both your current and proposed new mortgage. It then calculates the difference to show your potential monthly savings.
Mortgage Payment Formula (for each loan):
M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1]
Where:
M = Your total monthly mortgage payment
P = The principal loan amount (e.g., your current outstanding mortgage balance)
i = Your monthly interest rate (annual rate divided by 12)
n = The total number of payments over the loan's lifetime (term in years multiplied by 12)
Input Fields Explained:
Current Mortgage Balance (£): The outstanding amount you owe on your current mortgage.
Current Annual Interest Rate (%): The annual interest rate on your existing mortgage.
Current Term Remaining (Years): The number of years left until your current mortgage is fully repaid.
New Annual Interest Rate (%): The annual interest rate you expect to get on your new remortgage.
New Mortgage Term (Years): The desired total duration of your new mortgage. This can be longer or shorter than your remaining term.
Interpreting the Results:
Potential Monthly Savings: The difference between your old monthly payment and your new projected monthly payment. A positive number indicates you could save money each month by remortgaging.
New Monthly Payment: The estimated monthly repayment for your new mortgage based on the new rate and term.
Old Monthly Payment: The estimated current monthly repayment based on your current outstanding balance, rate, and remaining term.
When to Consider Remortgaging:
Interest Rates Fall: If current market rates are significantly lower than your existing rate, remortgaging can reduce your monthly costs and total interest paid.
End of Fixed-Term Deal: When your current deal (e.g., fixed or tracker rate) ends, you'll typically revert to your lender's standard variable rate, which is often higher. Remortgaging allows you to lock in a new competitive rate.
To Change Loan Term: You might want to shorten your term to pay off your mortgage faster or extend it to lower your monthly payments and improve affordability.
Accessing Equity: Some remortgages allow you to borrow more than your outstanding balance to fund home improvements, consolidate debt, or for other purposes. (Note: This calculator focuses on rate and term changes, not further advances).
Important Considerations:
Always factor in any remortgaging fees (e.g., arrangement fees, valuation fees, legal fees) when comparing offers. These can sometimes offset the savings from a lower interest rate, especially over a shorter term. Use the results as an estimate and consult with a qualified mortgage advisor for personalised advice.