Mortgage switch break-even calculator
Compare the monthly payment on your current mortgage deal with a new one and see how long the lower payment could take to recover the upfront cost of switching.
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Try this calculatorAbout this calculator
Compare the monthly payment on your current mortgage deal with a new one and see how long the lower payment could take to recover the upfront cost of switching.
How to use this calculator
Who this calculator is for
This calculator is for mortgage borrowers comparing a current deal with a new deal or product transfer where the new monthly payment is lower but switching has upfront costs.
What information to enter
Enter your current monthly mortgage payment, the expected payment on the new deal, the total costs you expect to pay upfront, and any cashback or fee contribution you expect to receive. Upfront costs can include product or arrangement fees paid in cash, exit or early repayment charges, legal fees, valuation fees and administration charges.
How the result is worked out
The calculator subtracts cashback from upfront costs, with a minimum net cost of zero. It then subtracts the new monthly payment from the current payment. When that monthly difference is positive, net upfront cost divided by monthly saving gives the exact break-even time. The whole-month figure rounds up because the costs are not fully recovered until that payment month has passed.
Worked example
If your current payment is £1,500 and the new payment is £1,350, the monthly saving is £150. If switching costs £1,200 upfront and you receive £300 cashback, the net upfront cost is £900. £900 divided by £150 is 6 months, so the switch reaches break-even after 6 months. After 12 months, the lower payments are £1,800 less in total, leaving a £900 net saving after the upfront cost.
What this calculator leaves out
This is a simple cash-flow comparison. It does not calculate a new mortgage payment from rates and balances, compare total interest over the mortgage term, model fees added to borrowing, predict future rates or include the return you could have earned on money used for upfront costs. If a fee is added to the mortgage and is already reflected in the quoted new payment, do not also enter it as an upfront cost.
What to do next
Check the exact fees and monthly payment in the mortgage illustration or offer. MoneyHelper notes that remortgaging can involve product fees, early repayment charges, legal, valuation and administration costs, so compare the full switching cost rather than the headline rate alone. If the break-even point is longer than you expect to keep the deal or property, consider the full cost carefully.
Frequently asked questions
What should I include in upfront switching costs?
Include costs you expect to pay in cash to switch, such as a product or arrangement fee paid upfront, an exit or early repayment charge, legal fees, valuation fees and administration charges. Do not count a fee twice if it is added to the new mortgage and already affects the new monthly payment.
How is the break-even point calculated?
The calculator divides net upfront switching costs by the monthly saving. The whole-month result rounds up so it shows the first full payment month by which the upfront cost has been recovered.
What if the new monthly payment is not lower?
There is no payment-saving break-even point if the new payment is equal to or higher than the current payment. The calculator still shows the resulting net cost over one, two and five years.
How does cashback affect the result?
Cashback or a fee contribution reduces the upfront switching cost. If it is greater than the entered upfront costs, the net upfront cost is treated as zero rather than becoming negative.
Does a shorter break-even point mean I should switch?
Not necessarily. Break-even is only one comparison. Consider the rate period, early repayment charges, total interest, flexibility, mortgage balance, fees added to borrowing and how long you expect to keep the deal.
Guides for your next step
- Mortgage switch break-even point: when do remortgaging savings recover the fees?
Learn how to calculate a mortgage switch break-even point, which remortgaging costs to include, how cashback changes the result and when a lower monthly payment can still be misleading.