Some may be asking whether it really makes much difference to change their mortgage provider. After all, interest rates have been very low for a while and loan providers’ rates are bound to reflect this; would be one line of thinking. It is true that the Bank of England base rate is extremely low at 0.5%, and has been since March 2009. However, in reality there is a wide spectrum of rates on offer and this can equate to considerable differences in the amount of interest that will be repaid by the borrower.

A quick glance at one of the comparison websites indicates interest rates for remortgages ranging from 3.6% – 5.4% or a difference of less than 2%, which may seem slight. However, whenever the cost of lending is reviewed, three of the key criteria for assessing this are the size of the loan, duration and the interest rate. Although in percentage terms, the figure is less than 2% between these two products, the difference in repayments can be significant. Inputting some figures and using the above rates, a £100,000 loan being remortgaged over a 15-year term, a borrower will repay either £720 or £812 per month, depending on which product is chosen – a significant difference on such a frequent basis. In addition, choosing the higher rate will result in a substantially greater repayment purely in interest – overall, an extra £16,500 if the higher rate were chosen.

Of course, there are other considerations to be borne in mind when switching mortgages other than the interest rate. Also worth reviewing are any exit fees chargeable by the lender if the borrower changes their mortgage to another provider. In many cases these exit fees apply to mortgages that are still in the fixed rate period, often between 1% – 3% of the whole mortgage (or £1,000 – £3,000 on a £100,000 loan) and so can equate to quite a significant amount. For many borrowers it may be preferable to see out the end of a fixed rate before moving to another product.

However for many households, remortgaging can offer real savings and according to figures released by the Council of Mortgage Lenders and reported in the Telegraph, it is an increasingly popular option – figures showing a rise in remortgaging of 30% from 2010 to 2011. Mortgages can be a complicated financial product and borrowers are advised to seek professional advice from an experienced adviser when considering remortgaging.