Remortgage to cut your monthly payments

Mortgage companies often offer introductory ‘teaser’ rates to new customers, either at a lower variable-rate, or a fixed rate for an introductory period. Once this is up, your monthly payments can rocket as your deal will likely revert to your lender’s standard variable rate (SVR) – which is usually much higher. It can pay to shop around for cheaper deals from other lenders.

Of course, moving to another mortgage provider will involve going through its application process and affordability criteria. You may incur fees in the process so don’t make any rash decisions. Instead, do your homework and make sure a new deal warrants your time and efforts.

Get help finding the best mortgage for you

To help you with your research, we probe the market each week to find the most competitive deals for you, whether you’re looking for long- or short-term fixes, variable-rates, or interest-only deals.


Our mortgage hunter is looking to remortgage on his £200,000 property, and will be looking to borrow £100,000 over 15 years – so they’re looking for a 50% loan-to-value (LTV) deal. Our buyer has decided to pay any valuation or arrangement fees up front to avoid being charged extra interest.  


Leeds Building Society has the best fixed-rate deal for remortgagors, thanks to a stonking £1,000 cashback deal. The rate is 2.09%, fixed until December 2018, implying monthly repayments of £648 for our buyer. After factoring in the £199 initial fee and cashback this mortgage will cost £14,751 over the first two years. The 5.44% standard variable rate is relatively high, and means repayments will rise to £791, assuming the rate doesn’t change and our buyer doesn’t remortgage.

Alternatively, Santander’s 1.74% two-year fix has repayments of £632 but a less generous cashback deal. There are no fees and £250 cashback, so the cost over two years is £14,918. The SVR is 4.49%, which will push repayments to £746 if our buyer doesn’t remortgage and the rate doesn’t change.

If you’re willing to pay an up-front fee, it’s possible to get a sub-1% fixed rate deal from HSBC, which charges 0.99% until December 2018 with initial fees of £1,672. Monthly repayments are £598 and the two-year cost is £16,072. After two years, the 3.69% SVR takes effect and repayments will rise to £707. 

Long-term fixes

It doesn’t look like interest rates will rise substantially any time soon, so it’s relatively cheap to fix your mortgage repayments for the longer term. The best deals are available for well under 3%. However, monthly repayments are much higher than shorter fixed-rate terms, so it only makes sense if you expect rates to rise in the next few years.

For our buyer, HSBC has the best ten-year deal. It charges 2.49% until December 2026, with no fee. That’ll cost £666 per month, or £15,984 over the first two years. The SVR is 3.69%, which will push repayments up to £686 after the fixed rate period.

The Coventry also has a fee-free ten-year fix at 2.69%. That’ll cost £676 per month, or £16,224 over two years. The SVR is also 4.24%, which will increase monthly repayments to £702 after ten years, assuming no changes.

If you’re happy locking in your rate for less time you can get a cheaper deal. First Direct has the most attractive five-year term. The rate is 2.08%, fixed until September 2021 and there’s a £35 fee. That’ll cost £647 a month and £15,563 over two years.  Repayments will rise to £699 when the 3.69% SVR kicks in, again, assuming it doesn't change. 

Variable rates

The Woolwich, Barclays’ mortgage arm, will lend at 1.49% over the Bank of England base rate for two years, currently 1.74%. That’ll cost £632 each month. There are no fees and £250 cashback, so our buyer will pay £14,918 over two years.  After that, the 3.74% SVR kicks in, though it could change. If it doesn’t, repayments will rise to £714 each month. 


While interest-only offers can be tempting, you’ll need a solid plan to pay off the capital at the end of the loan. You should also factor into your decision-making the interest you owe won’t diminish as you won’t be paying off your debt as you would with a capital repayment mortgage.

Not all providers will lend on an interest only basis, so your best bet could is likely to get a mortgage via a broker. Indicative rates can be found in our mortgage comparison tool

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Your Comments

Need to update your article regarding interest only mortgages ....Yorkshire Building Society DO NOT  offer interest only mortgages !!  have just checked with them .... so your article is misleading !!