Remortgage or overpay? What UK rates in late 2026 actually mean for you

In August 2026 Moneyfacts recorded the average two-year fixed rate at 5.63% and the average five-year fix at 5.66%, while the average standard variable rate — the rate you drop onto when a deal ends — held at 7.13%. On a £250,000 repayment mortgage over 25 years, that gap is worth roughly £230 a month.

That is why the first move is almost always to fix the rate, not to overpay. Overpaying £200 a month into a 7.13% SVR is worth less than moving the same balance onto a 5.6% deal and then overpaying.

Start shopping around three to six months before your current deal ends. Most lenders will let you reserve a rate that far ahead and re-book it for free if rates fall before completion.

Nearly every UK fixed deal allows penalty-free overpayments of 10% of the balance per year. Some lenders base that on the original loan rather than the current balance, and some run the window from the deal anniversary rather than 1 January. Exceed it and the early repayment charge is typically 1-5% of the overpayment, which usually cancels out the interest saved.

At around 5.6%, every £100 you overpay earns a guaranteed, tax-free 5.6% return. To beat that with savings you would need an account paying more than 5.6% after tax, which is well above what UK easy-access accounts pay in 2026 — so for most people with a 5%+ mortgage, overpaying wins.

Take a £180,000 balance at 5.6% with 22 years left. The contractual payment is about £1,140 a month. Add a £200 monthly overpayment — comfortably inside a 10% allowance of £18,000 a year — and you clear the mortgage several years early and save tens of thousands in interest, because every extra pound comes straight off the balance that interest is charged on.

The exact figures depend on your balance, rate and term, which is what the overpayment calculator is for. Put your own numbers in rather than trusting a headline saving from anywhere, including here.

A cheaper rate with a £1,499 arrangement fee is not always cheaper. Compare the total cost over the fixed period: payments across the term, plus the fee, plus any valuation or legal costs not covered by a free-legals deal. On smaller balances the fee often outweighs the rate saving; on large balances it rarely does.

If your property has gone up in value, get the loan-to-value re-checked before applying. Dropping from 85% to 80% LTV moves you into a cheaper band and can be worth more than shopping between lenders in the same band.