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Remortgaging in 2019: could you get a cheaper rate and cut the cost of your monthly repayments?

Discover if you could save money by switching mortgage this year

If you’re coming to the end of your fixed-rate mortgage later this year, you might be wondering how much you could save by switching to a new deal.

Here, we explain how the mortgage market has changed over the last five years, and offer advice on getting the best rate when remortgaging.

The fixed-rate mortgage market in 2019

Right now, mortgage rates are very attractive, with two-year fixed-rate deals averaging 2.47%, and five-year deals at 2.85%.

Although these figures are well in excess of the record lows seen in the Autumn of 2017, rates remain very competitive, especially compared to the averages back in 2014.

One of the key trends of the last five years has the closing of the gap in cost between two and five-year fixes. Five years ago, the gap was 0.67%, but now it’s just 0.38%.

Remortgaging from a two-year fix in 2019

People tend to talk about the past through rose-tinted spectacles, but 2017 was a halcyon year to take out a mortgage, as rates hit historic lows ahead of two increases in the Bank of England base rate.

If you were fortunate enough to take out a two-year fix when the sun was shining, you’ll be due to remortgage later this year.

As the chart below shows, average rates on another two-year fix are around about 0.2% more expensive than they were back in 2017.

Month Average two-year rate in 2017 Average two-year rate in 2019
January 2.31% 2.52%
February 2.33% 2.49%
March 2.33% 2.49%
April 2.32% 2.48%
May 2.3% 2.47%

Can I remortgage to a lower rate?

While average rates provide a useful guide to the current market, they’re not necessarily reflective of the deal you might be offered – especially when it comes to remortgaging.

For example, after two years of paying off your mortgage (and perhaps even making over-payments), your outstanding borrowing will be much lower.

In addition, the value of your property might have increased, which could allow you to remortgage at a lower loan-to-value (LTV) level – decreasing your monthly repayments in the process.

The table below shows the lowest rates currently available for each loan-to-value category.

Max loan-to-value Lender Initial rate Revert rate APRC Fees
60% Furness 1.39% 5.79% 5.2% £1,250
75% Lloyds 1.51% 4.24% 3.8% £1,499
80% HSBC 1.64% 4.19% 3.8% £999
90% Lloyds 1.79% 4.24% 3.9% £1,499

Remortgaging from a five-year fix in 2019

If, however, you locked in your mortgage rate for five years back in 2014, you’ve probably been counting the days until you could switch to a better deal, with rates now much lower than when you took out your original home loan.

It’s been a good 12 months to take out a five-year fix, with increased competition among lenders resulting in good rates for borrowers looking to protect their repayments for longer.

Many five-year fixes come with high early repayment charges, so such long-term deals are best for homeowners who aren’t planning on moving in the foreseeable future and want security among wider economic uncertainty.

As the table below shows, the average five-year fix has dropped in cost by more than a percent this year, when compared to five years ago.

Month Average five-year rate in 2014 Average five-year rate in 2019
January 3.94% 2.94%
February 3.99% 2.9%
March 4.04% 2.89%
April 4.05% 2.88%
May 4.12% 2.85%

Cheapest five-year fixed-rate mortgages

As we said earlier, average rates only tell half of the story. If you’re able to remortgage at a lower LTV, you could access some great rates of 2% or below on another five-year deal.

Max loan-to-value Lender Initial rate Revert rate APRC Fees
60% Skipton 1.78% 4.99% 3.9% £1,995
75% Yorkshire Building Society 1.87% 4.99% 3.8% £1,495
80% Yorkshire Building Society 2% 4.99% 3.9% £1,495
90% Yorkshire Building Society 2.21% 4.99% 4% £1,495

How much does your rate affect what you’ll pay?

We’ve done the theory, so let’s look at the practical aspect of mortgage rates – what you’ll actually pay each month.

And in truth, 0.1% here or there doesn’t have a significant effect on your monthly repayments.

Using data from Moneyfacts, we’ve crunched the numbers to give a broad estimate of how your rate affects your mortgage payment.

To do this, we’ve taken some of the best deals currently available, based on a remortgage of £200,000 at 75% LTV.

Two-year fixed-rate deals

Initial rate Estimated monthly payment during fixed period
1.5% £800
1.7% £820
1.9% £840
2.1% £860


Five-year fixed-rate deals

Initial rate Estimated monthly payment during fixed period
1.9% £840
2.1% £860
2.3% £880
2.5% £900

When should you think about remortgaging?

If you’re coming to the end of your fixed term between now and the end of 2019, it’s not too early to shop around for a better deal.

Generally speaking, your mortgage lender will write to you a few months before the end of your current fix to warn you that you will soon be moved on to its standard variable rate (SVR), which will almost always be higher than the rate you’re paying during your fixed term.

Your current provider may offer you a remortgaging deal (usually called a product transfer) or invite you to call and discuss your options.

It’s possible to agree a new mortgage as early as six months before the end of your fixed term, and remortgaging can take as long as eight weeks.

With this in mind, the earlier you get your finances in order and start shopping around, the better.

Find out more: discover how you could remortgage to save thousands in repayments.

The cost of remortgaging

Early repayment charges

As you might have gathered, we think it’s very important to arrange a new deal before being moved on to your lender’s SVR – but there are a few things you’ll need to think about first.

As we mentioned earlier, some mortgages come with early repayment charges (sometimes noted as ERCs or described as ‘exit fees’). On a five-year fix, these will usually operate on a sliding scale starting as high as 5% – so 5% in year one, 4% in year two, 3% in year three etc.

This won’t affect your ability to remortgage at the end of your fixed term, but it does mean that if you’ve still got a year or two to go, you might be better off waiting it out.

Arrangement fees

When choosing a new deal, you’ll need to look a little beyond just the initial rate. While market-leading deals are very attractively priced, some come with very high arrangement fees (sometimes called product fees), which can rise above £1,000.

it’s possible to add this fee to your mortgage, but you’ll then need to pay interest on it – so if possible, you should consider paying it up-front.

Find out more: get the lowdown on finding the best mortgage deal.

Advice on your mortgage options

With so many mortgages to choose from, it can be helpful to speak to a whole-of-market mortgage broker, who can offer you independent advice on your options.

To chat to an expert, call Which? Mortgage Advisers on 0800 197 8461 or fill in the form below for a free callback.

Your home may be repossessed if you do not keep up repayments on your mortgage.

Which? Limited is an Introducer Appointed Representative of Which? Financial Services Limited, which is authorised and regulated by the Financial Conduct Authority (FRN 527029). Which? Mortgage Advisers and Which? Money Compare are trading names of Which? Financial Services Limited.

Categories: Money, Mortgages & property

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