How Mortgage Overpayments Affect Your Next Remortgage Rate (UK)
- Nick Parker
- Jan 11
- 3 min read
Updated: Jan 12
Summary
This article explains how mortgage overpayments work during fixed-rate periods in the UK, including early repayment charges, lender rules, and common limitations. It is for general information only.
If you’re planning to remortgage, you may be wondering whether overpaying your mortgage now will help you secure a better interest rate later.
The short answer is yes — mortgage overpayments can significantly affect your next remortgage rate, but not in the way many people expect.
In this guide, we explain how mortgage overpayments influence remortgage rates in the UK, what lenders actually look at, and how to use overpayments strategically before switching deals.
Do mortgage overpayments directly improve your remortgage rate?
Mortgage overpayments don’t improve your rate directly.
Instead, they improve the factors lenders use to price your mortgage — most importantly, your loan-to-value ratio (LTV).
In practice:
Overpayments reduce your outstanding balance
A lower balance improves your LTV
A lower LTV can unlock cheaper remortgage rates
Why loan-to-value (LTV) matters so much
LTV is one of the most important factors in UK mortgage pricing.
It’s calculated as:
Mortgage balance ÷ property value
Lenders typically price mortgages in LTV bands, such as:
95%
90%
85%
75%
60%
Dropping into a lower band can lead to:
Lower interest rates
More lender options
Better deal availability
Mortgage overpayments are one of the most reliable ways to reduce LTV without relying on house price growth.
👉 You can see how overpayments reduce your balance over time using the
Example: how overpayments can improve your remortgage rate
Imagine:
Property value: £300,000
Current mortgage balance: £255,000 (85% LTV)
If you overpay £15,000 before remortgaging:
New balance: £240,000
New LTV: 80%
That change alone could move you into a cheaper pricing band — even if interest rates haven’t changed.
Is it worth overpaying just before remortgaging?
Often, yes — but only if you stay within your lender’s rules.
Overpaying before remortgaging can:
Improve your LTV
Reduce interest costs
Strengthen your remortgage application
However, you must avoid triggering early repayment charges (ERCs).
We explain these limits in detail in
Fixed rate mortgages and remortgaging
If you’re on a fixed rate:
Overpayment allowances usually still apply
Large overpayments can trigger ERCs
Timing becomes especially important
Many homeowners overpay gradually during a fixed rate, then reassess near the end.
We cover this fully in
Monthly overpayments vs lump sums before remortgaging
Both approaches can help improve your remortgage position — but they behave differently.
Monthly overpayments
Easier to manage
Lower risk of breaching caps
Gradual balance reduction
Lump sum overpayments
Faster LTV improvement
Higher ERC risk if mistimed
Useful just before remortgaging
We compare these strategies in
Should you overpay or keep the money in savings?
Some homeowners prefer to save and overpay later — particularly if savings rates are competitive or flexibility is important.
This approach can make sense depending on timing and risk tolerance.
We explore this comparison in
Do lenders consider your overpayment history?
UK lenders generally do not reward overpayment behaviour directly.
They focus on:
Balance
LTV
Income and affordability
Credit profile
However, overpayments indirectly strengthen your application by improving the numbers that matter most.
What happens to overpayments when you remortgage?
Your overpayments are not lost.
When you remortgage:
Your reduced balance carries forward
Your new loan is based on the lower amount
You can often choose:
Lower payments
Shorter term
Or a combination of both
We explain this in detail in
How to plan overpayments to improve your next rate
To use overpayments effectively:
Check your current LTV band
Identify the next pricing threshold
Stay within overpayment allowances
Time payments carefully
For deeper modelling — including interest rate changes and remortgage timing — the
Advanced Mortgage Planner preview lets you explore different scenarios side by side.
Final thoughts
Mortgage overpayments don’t automatically guarantee a better remortgage rate — but they can significantly improve your chances by lowering your loan-to-value.
Used strategically, overpayments can:
Unlock cheaper rates
Reduce interest costs
Improve deal availability
Strengthen your overall position
The key is understanding how lenders price mortgages and planning your overpayments accordingly.
