Refinancing
Assess whether refinancing releases worthwhile cash and how long costs take to recover.
Introduction
Who this is for: Investors considering a remortgage to release equity or reduce rate.
Why it matters: Refinancing has real costs — early repayment charges, arrangement fees, valuation and legals. A lower rate is only worth it if the saving recovers those costs within your holding period.
Typical scenario: A landlord whose property has risen in value wants to release equity for a deposit on the next purchase.
- Focusing on the rate saving while ignoring the ERC on the existing loan.
- Releasing equity without a productive use for it — the debt cost is certain, the return is not.
- Forgetting that releasing cash raises LTV and therefore usually the rate on the whole loan.
Inputs
Current Loan
New Loan
Analysis
Refinancing from £180,000 to £238,000 at 5.1% costs £5,800 in ERC and fees, releasing £52,200 net.
Monthly interest rises by £52 — the released equity needs to work harder than that to justify the refinance.
This analysis provides context, not financial advice. Consult a qualified adviser before making investment decisions.
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Live Results
Cash Released
£52,200
Monthly Interest Change
£-51
Cost to Refinance
£5,800
Payback Period
0.00x