Adding the fee to the loan costs far more than the fee
This is the box almost nobody thinks about and almost no calculator prices, and lenders make it the default on most applications.
A 999 arrangement fee added to a mortgage with twenty years left does not cost 999. It becomes part of the balance. It is then repaid on exactly the same schedule as the rest of the mortgage, which means it carries interest for the whole remaining term.
Paying it up front costs 999. The entire difference comes down to a checkbox, and on a long remaining term it is worth real money. The tool prices it directly by running the same mortgage both ways and taking the difference in total paid.
There is a reasonable case for adding it, and it is a cashflow case rather than a value one: if you do not have the fee available now, adding it is better than not remortgaging. Just make the decision knowing the number rather than because it was pre-ticked.
Measure the saving over the deal, not the term
The other common error runs in the opposite direction and flatters switching.
A two year fix compared against twenty years of savings produces an enormous and completely unreal number. You do not get twenty years of that rate. You get two, and then you are back in the market at whatever exists then, on a smaller balance and a shorter term.
The honest test is whether the saving across the deal period beats the fees and any early repayment charge. Everything after that is a different decision, taken later, with information you do not have yet. The tool shows both figures side by side so the gap between them is obvious.
Early repayment charges, and two things worth checking
If you are leaving a deal early, the charge is usually the largest single cost in the decision. Two things are worth checking before assuming it kills the switch.
It normally steps down each year of a fix. Being a few months from the next step, or from the end, can change the answer entirely, and waiting is sometimes worth more than the better rate.
Many lenders let you switch product up to six months early without paying it. That is a switch with your existing lender rather than a move, but it can capture a falling rate without the charge.
The band matters more than the shopping around
Loan to value bands move rates in steps rather than smoothly. Crossing below 90%, 85%, 80% or 75% typically unlocks a materially better product, and the gap between two adjacent bands is often larger than the gap between two lenders in the same band.
Two practical consequences. If you are close to a band, a modest overpayment before applying can be worth more than any amount of comparison. And a valuation that comes in slightly under can push you into a worse band on the day, after you have already committed to the application, which is worth building a little headroom against.
The figures carry no currency, and that is deliberate
Every number here is proportional. A payment is a balance against a rate against a term, and none of those three changes when the currency does. So the amounts are printed without a symbol and you supply the unit by typing your own numbers.
The vocabulary differs more than the maths does. A British remortgage is an American refinance, an arrangement fee is closer to an origination fee or closing cost, and an early repayment charge is a prepayment penalty. Different words for the same decision, which is why this is one page rather than four.
Where you will be standing next time
The tool also shows what you will owe at the end of the new deal, with the remaining term alongside it, because that is the position you will be remortgaging from in two or five years.
A smaller balance and a shorter term both help you then, which is the quiet argument for overpaying during a cheap fix rather than treating the saving as spending money. Money paid off while the rate is low reduces the balance you carry into whatever rate comes next.
And it is worth comparing a product transfer with your existing lender against the open market. It usually skips the legal work and the valuation entirely, so the upfront costs are much lower even where the headline rate is slightly worse.
Common questions
Should I add the arrangement fee to the loan?
Usually not, and it is the default on most applications precisely because it is easy. A 999 fee added to a mortgage with twenty years left does not cost 999. It becomes part of the balance and is repaid on the same schedule as everything else, so it carries interest for the full remaining term. Paying it up front costs exactly 999.
Should I judge the saving over the deal or the whole term?
Over the deal, always. A two year fix compared against twenty years of savings looks unarguable, but you do not get twenty years of that rate. You get two, and then you are back in the market at whatever exists then. The only saving you have actually been offered is the one across the deal period, after fees and any early repayment charge.
Is it worth paying an early repayment charge to switch?
Only if the saving over the new deal beats it, which the tool works out directly. Two things are worth checking first: the charge usually steps down each year of a fix, so being close to the end changes the arithmetic, and many lenders let you switch product up to six months early without paying it at all.
Why does my loan to value band matter so much?
Because the band you fall into can move the rate more than shopping around does. Crossing below 90%, 85%, 80% or 75% typically unlocks a better product, and a valuation coming in slightly under can push you the wrong way on the day. If you are close to a band, a modest overpayment before applying can be worth more than the effort of comparing lenders.
Is a product transfer with my current lender worth considering?
Very often, yes. A product transfer usually skips the legal work, the valuation and much of the paperwork, so the upfront costs are far lower even where the headline rate is slightly worse. Compare it against the open market rather than assuming you have to move lender to get a new deal.