Remortgaging in 2025 - how could it affect you?

Remortgaging in 2025 - how could it affect you?

Since 2020, the property market has undergone significant changes. In response to the economic uncertainty caused by the pandemic, the base rate was slashed to a historic low of 0.1%, resulting in some of the most affordable mortgage rates in years.

The government’s stamp duty holiday provided further incentives for buyers, while lockdowns and the shift to remote working reshaped priorities. Many moved away from city apartments in favour of homes offering more space for work, leisure, and outdoor access.

For those who locked in five-year fixed-rate deals during this period, 2025 will likely mark the time to remortgage, with market conditions looking very different from those of the pandemic years.

Similarly, homeowners who opted for two-year fixed-rate deals following the turbulence of the 2023 mini-budget will soon face decisions about their next steps. While some may choose to sell and move on, others will explore remortgaging options to adapt to their current circumstances.

The remortgaging surge in 2025

An estimated 1.8 million fixed-rate mortgages are set to mature in 2025, according to UK Finance. After years of mortgage rates fluctuating significantly, borrowers coming off their low-rate deals could face a steep jump in monthly repayments when remortgaging.

For many first-time buyers who took advantage of the historically low interest rates in 2020, they’ll also want to avoid being automatically moved to their lender’s typically higher standard variable rate (SVR). The SVR usually follows the Bank of England base rate, which is now considerably higher than it was in 2020. While remortgaging this year will undoubtedly be at a higher interest rate than in 2020, homeowners will save money by avoiding the higher variable rates.

Plus, in another boost for those remortgaging this year property values in many areas may have increased since 2020, giving buyers more equity in their homes. This could enable them to access better mortgage deals with lower loan-to-value (LTV) ratios, compared to when they first took out their mortgage

While the Bank of England base rate is decreasing slowly, many are looking to remortgage to a shorter-term fixed-rate deal in 2025, ensuring stability in their monthly payments.

Conveyancing is essential in the remortgaging process, ensuring the legal transfer of your mortgage is handled efficiently. A conveyancer manages tasks like property checks, legal documents, and coordination with all parties, helping to avoid delays and ensuring compliance with lender requirements, providing peace of mind during a potentially stressful financial transition.

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Understanding the impact of rate changes across the UK

At My Home Move Conveyancing, we’ve analysed the current remortgaging landscape to predict which areas across the UK will be most affected by the five-year shift in mortgage rates as fixed terms come to an end in 2025.

To do this, we took the average sale value for homes in every local authority in the UK, to understand the overall mortgage value, based on a 20% deposit. Then, we worked out the average monthly repayment for the last five years, based on an initial 30-year repayment term under the average rate of 2.4% in 2020.

We then projected what the remaining balance would be for homeowners in each area and calculated how monthly payments might change under current rates: 4.77% for a five-year fixed deal and 4.98% for a two-year fixed option.

For those securing a new five-year fixed deal, average monthly repayments are set to rise by 29.9% nationwide. Homeowners opting for a two-year fixed rate for added flexibility will see a slightly higher increase of 33%.

Londoners face the biggest increases

Homeowners remortgaging in London are likely to face the biggest increase in mortgage rates, due to the average house price in 2020 still being more expensive than in other areas in the country.

Those in Kensington and Chelsea and the City of Westminster look to face the biggest hikes, with annual rises of over £13,000, and monthly repayment rises of over £1,150.

Elsewhere across the capital, others facing larger hikes to their monthly mortgage payments include Camden (£796), Richmond upon Thames (£663), Hackney (£562) and Barnet (£512).

Regional impact: How remortgaging rates will vary across the UK in 2025

St Albans residents are also likely to face larger mortgage repayments if they’re looking to remortgage this year, of £493 in mortgage repayments per month for a two-year fixed. Others include Surrey at £434, Cambridge at £427, Oxford at £426, Winchester at £489 and Trafford at £285 - the biggest growth in the North.

The lowest growth comes from those in the North of England, with Burnley homeowners seeing a likely growth of £84, Durham at £98, Blackpool at £105 and Sunderland at £115.

What do I need to know about remortgaging?

Deciding when to remortgage depends on your financial situation and market conditions. One key factor is the Bank of England base rate, which affects mortgage interest rates and monthly payments. Understanding how current rates impact your finances can help you decide if it’s the right time to remortgage.

Here are some things to consider:

Remortgaging can save money, improve your rate, or adjust your agreement, but it’s essential to weigh your options and act at the right time.

Alistair Singer, Digital Channel Director at My Home Move Conveyancing, said: “The key to remortgaging is to start planning early. Having a deep understanding of your finances can help you act on a good deal quicker.

“If you’re coming to the end of your fixed rate, it’s important to understand when your rate expires, what your current interest rate is, what variable rate you’ll move onto when your rate expires, and what your remaining mortgage balance is. If you’re planning to remortgage with a different lender, you should also be aware of any other terms in your contract, such as early repayment charges, exit fees and porting rules.

“Finally, gather all the necessary documents, such as proof of income, recent bank statements, and ID, to ensure you can avoid delays in the process. If you’re unsure, seek advice from a mortgage broker or conveyancer who can guide you through the options and ensure you make an informed decision.”

For a personalised conveyancing quote, use our remortgaging calculator.

Methodology

We took the average sale value for homes in every local authority in the UK, to understand the overall mortgage value, based on a 20% deposit. Then, we worked out the average monthly repayment for the last five years, based on an initial 30-year repayment term under the average rate of 2.4% in 2020.

We then looked at what the remaining balance could look like for the average homeowner in each area, before figuring out a picture of what the new monthly payments could look like, based on the current rates of 4.77% for a five-year fixed, and 4.98% for a two-year.

It took the average sale value in every local authority in the UK, to understand the overall mortgage value, based on a 20% deposit. Then, it worked out the average monthly repayment for the last five years, based on a five-year-fixed term at the average rate of 2.4% in 2020.