What this calculator does
Takes current mortgage details, early repayment charge (ERC) percentage, new rate, and switching costs. Returns monthly saving, total switching cost, and break-even period in months.
The formula
ERC cost = outstanding_balance × ERC_percentage / 100 Total switching costs = ERC + arrangement_fee + legal_fees + valuation Monthly payment — current rate: M_current = P × [r_current(1+r_current)^n] / [(1+r_current)^n − 1] Monthly payment — new rate (same remaining term): M_new = P × [r_new(1+r_new)^n] / [(1+r_new)^n − 1] Monthly saving = M_current − M_new Break-even months = total switching costs / monthly saving
Assumptions
- The same remaining term is used for both the current and new rate calculations.
- No further rate changes occur after remortgaging.
- The break-even calculation ignores the time value of money — it is a straightforward payback period rather than a net present value analysis.
- The outstanding balance is the same for both mortgages — no additional borrowing on remortgage.
Data sources
No external regulatory data sources are used. All inputs — rates, ERC percentage, fees — are entered by the user. The calculator applies a standard mortgage amortisation formula.
Limitations
- Does not account for extending the term when remortgaging, which is a common choice but changes the comparison materially.
- Does not model the effect of switching to a different remaining term — extending the term reduces the monthly payment but increases total interest paid.
- Does not include a broker fee if one is applicable — add this to the total switching costs manually if relevant.
- If the monthly saving is zero or negative (for example, where the new rate is higher), break-even is not calculable and remortgaging would not reduce costs.
Worked example
Inputs: £200,000 outstanding, 22 years remaining, current rate 5.5%, new rate 4.5%, ERC 1.5%, arrangement fee £999, legal fees £500.
ERC: £200,000 × 1.5% = £3,000 Total switching costs: £3,000 + £999 + £500 = £4,499 M_current (5.5%, 264 months remaining): r = 5.5% / 12 = 0.4583% = 0.004583 M_current ≈ £1,302/month M_new (4.5%, 264 months remaining): r = 4.5% / 12 = 0.375% = 0.00375 M_new ≈ £1,156/month Monthly saving: £1,302 − £1,156 = £146 Break-even: £4,499 / £146 = 30.8 months (approx 2 years 7 months)
Changelog
| Date | Change |
|---|---|
| May 2026 | Initial publication |