Remortgage break-even
Switching to a lower mortgage rate on a £200,000 balance saves an estimated £121 a month, and the £999 product fee is estimated to be repaid by month 9, under the mortgage regulation the Financial Conduct Authority publishes on gov.uk. This calculator estimates the break-even point from the balance, both rates, the fee and the term entered.
How does break-even work?
Switching to a lower rate cuts the monthly payment, but lenders charge a product or arrangement fee for the new deal. The break-even month is the fee divided by the monthly saving, rounded up. Paying £999 to save an estimated £121 a month recovers the fee by month 9 in this example. Anything after that point is estimated as pure benefit, up to the point the deal ends.
The catch is the fixed period. If a deal breaks even in month 30 but the fix ends at month 24, the payback is never actually reached, and a fee-free deal at a slightly higher rate could work out better. The break-even month is best weighed against the length of the fix, not the whole mortgage term.
What would I save in this example?
On a £200,000 balance with 20 years left, moving from 5.50% to 4.40% is estimated to drop the payment from £1,376 to £1,255, a saving of £121 a month. The £999 fee is estimated to be recovered by month 9. Held for the full remaining term, the new deal is estimated to cost £28,100 less overall after the fee, though the real figures depend on the rate and term actually entered.
Common questions
What does the break-even month mean?
It is the month at which the money you have saved on lower payments finally covers the product fee you paid to switch. Before that point the fee still outweighs the saving. After it, the new deal is genuinely cheaper. If the break-even month falls after your fixed period ends, the fee may not be worth paying.
Should I add the fee to the loan or pay it up front?
This tool assumes you pay the fee separately. Adding it to the loan spreads it out but you then pay interest on it for the whole term, which usually costs more overall. If the fee is small relative to the saving, paying it up front and clearing the break-even quickly is normally better.
Is a lower rate always worth switching to?
Not always. A rate that is only slightly lower can be wiped out by a large product fee, especially on a smaller balance where the monthly saving is modest. The break-even month is the honest test: a low rate with a big fee can break even too late to matter.
Why compare over the remaining term?
Because the monthly payment depends on how long is left to run. The tool keeps the term the same on both deals so it compares like with like. In reality you usually fix for two to five years, so weigh the break-even month against the length of the new fix, not the full term.
How does break-even work?
A lower rate reduces the monthly payment, and the break-even month is the fee divided by that monthly saving, rounded up to a whole month. Before the break-even month, the fee still outweighs what has been saved. After it, the estimated saving is running ahead of the fee. This is a standard way lenders and brokers, including those regulated under the Financial Conduct Authority, compare the cost of switching a mortgage.
What would I save in this example?
On a £200,000 balance with 20 years left, moving from 5.50% to 4.40% is estimated to drop the monthly payment from about £1,376 to £1,255, a saving of roughly £121 a month. The £999 fee is estimated to be recovered by month 9. Held for the full remaining term, the new deal is estimated to cost £28,100 less overall, though the actual figures always depend on the rate and term entered.
Sources & Rate Verification
Rates verified against official statutory guidance on 6 September 2026.