How to compare two mortgage deals

At some point in the remortgage process, you will be looking at two or more deals and trying to work out which is actually cheaper. It sounds like it should be simple — just take the lower rate. But it rarely is, and people who go with the lowest headline rate without doing the full calculation often end up paying more than they needed to.

This guide explains why the headline rate misleads, what the right comparison looks like, and what else to check beyond the cost calculation. When you are ready to plug in two concrete offers, use our free Loan Comparison Calculator— it totals payments and fees over the period you choose so you can see which deal costs less in practice.

Why the headline rate is not enough

Mortgage lenders set rates competitively, but they also charge fees. Arrangement fees, booking fees, valuation fees — on some deals these add up to £1,000 to £2,000 or more. A lender offering a sharper rate often recovers the margin through a higher fee.

The result is that a mortgage with a lower rate can cost more in total than one with a higher rate and no fee. The gap in monthly payments on a rate difference of 0.2–0.3% might be £30–50 per month — but a £1,500 fee takes three to four years to recover through that saving. On a two-year fix, you might never recover it.

A clear example

Deal B is cheaper if you stay on it for more than 48 months. On a two-year fix, Deal A wins by about £750 once you add the fee. On a five-year fix, Deal B saves you around £360. The breakeven point is everything — which is why our loan comparison tool lets you set the comparison window to match your actual fixed term.

The right way to compare deals

Compare total cost over the fixed period

Calculate the total amount paid over the fixed term for each deal: monthly payment multiplied by the number of months, plus any fees. This single number gives you the true cost of each deal for the period you will actually be on it.

Do not compare beyond the fixed period unless you are confident you will stay on the lender's standard variable rate (SVR) rather than remortgaging again. Most people remortgage at the end of each fixed term, so the comparison should match that reality.

Include all fees

The arrangement fee is the big one, but also check for:

• Booking fee. Sometimes charged upfront and non-refundable even if the application falls through.
• Valuation fee. Some lenders cover this, others charge £200–500.
• Legal fees. On a remortgage, your lender may offer a free legal service or a cashback contribution. If not, budget £300–600.
• Account fee. Some lenders charge an annual fee for having the mortgage with them.

Factor in the revert rate

At the end of the fixed term, your mortgage reverts to the lender's Standard Variable Rate (SVR) unless you remortgage again. SVRs vary significantly between lenders — from around 6% to over 8% in the current market. If you ever miss a remortgage deadline and sit on the SVR for a few months, the cost can be significant.

When comparing deals, check the SVR of each lender. A deal with a more competitive SVR gives you more buffer if you are slow to remortgage at the end of the term.

Check early repayment charges

Early repayment charges (ERCs) apply if you exit the mortgage before the end of the fixed term. They are typically expressed as a percentage of the outstanding balance — often 1–5%, tapering down over the fixed period.

If there is any realistic chance you might need to sell or remortgage early — because of a job change, relationship change, or house move — the ERC terms matter as much as the rate. A deal with aggressive ERCs in Year 1 and 2 can cost tens of thousands if you need to exit early.

Fixed vs tracker: a different type of comparison

The comparison above assumes two fixed-rate deals. If you are weighing a fixed rate against a tracker, the calculation changes because a tracker's rate moves with the Bank of England base rate.

Trackers are typically priced below equivalent fixed rates to reflect the risk you take on. When base rates are expected to fall, trackers look attractive. When they're expected to rise, fixing provides certainty.

A few things to check on tracker mortgages:

• Is there a collar? Some trackers have a floor rate below which they will not fall, even if the base rate does.
• Are there ERCs? Some trackers have no early repayment charges, which gives you flexibility to switch if rates move against you.
• What is the margin above base rate? A tracker at base rate + 0.9% and base rate + 1.4% are very different deals over time.

Loan-to-value and its effect on your rate

One factor that affects which deals you can access is your loan-to-value ratio (LTV) — the size of your mortgage as a percentage of your property's value. The better your LTV, the better rates you can access.

If you are close to a lower LTV band — say at 76% when 75% would unlock better rates — it may be worth overpaying enough to cross that threshold before remortgaging. The rate saving over a five-year term can more than justify the overpayment.

Using a broker vs going direct

You can compare deals yourself using the lender's own rates or a comparison site. But a good mortgage broker has access to deals not available on the open market and can run the full cost comparison across dozens of lenders simultaneously.

Brokers charge either a flat fee (£300–700 typically) or take a commission from the lender. For straightforward cases, going direct to a lender can work well. For complex situations — self-employment, unusual property types, adverse credit history, or large loan sizes — a broker usually more than pays for themselves.

Whichever route you take, understanding how to compare deals yourself means you can check that any recommendation you receive actually makes sense, rather than taking it on faith.