Please try not to panic. I've run the numbers and I think your DP's £4-5k figure is too high, unless the new mortgage is on a much shorter term.
1. What you'd realistically pay
You started a 35 year term in 2017, so in July 2027 you'll have about 25 years left. Using £550k over 25 years on a repayment mortgage:
- at 4.5%: about £3,060 a month
- at 5%: about £3,215 a month
- at 5.5%: about £3,380 a month
- at 6%: about £3,545 a month
So that's roughly £600 to £1,000 a month more than now. It's a real jump, but it's not £4-5k. To hit £4k+ at 5% you'd need to shrink the term to around 15 years (about £4,350). It's worth asking DP where their figure came from, because a lender or calculator may have assumed a shorter term.
2. You're in a strong position
- Your loan is about 60% of your home's value (£550k on £910k), and it'll be slightly under 60% by July because you're paying it down. 60% LTV and below is where the best rates are.
- £550k is under 3x your £200k joint income, so affordability checks shouldn't be an issue.
- Having just gone through this process myself, the affordability checks are mainly on credit, whether you have any children that are under 18 living at home, car finance. That kind of thing, everything else - utlities, council tax, groveries are not part of affordability checks.
3. Your options
- Product transfer: stay with your current lender and pick a new deal. It's usually quick, often with no new affordability checks.
- Remortgage: move to a different lender if they're cheaper. A broker can compare the whole market against your current lender's offer. I recently got a further advance with Halifax and the rate was 5.19% 2 year fixed.
- Lock in early: most lenders let you secure a new rate up to 3/6 months before your deal ends, so from around January 2027. (Application or Mortgage in prinicple) If rates fall before July, many will let you switch to a cheaper like-for-like deal before it starts. This protects you if rates go up and costs you nothing if they go down.
- Keep the term long: you can keep the remaining 25 years (or extend it) to keep payments down, and overpay later when you're comfortable. Halifax for example let you extend to 75, but that involves an hour and a half call with a mortgage advisor. I have also just done this, took a while but was fine.
4. Interest only?
Possibly. You'd need a lender-approved repayment plan. Some lenders accept "sell the house at the end" if you have enough equity. For example, one major lender asks for at least £300k equity for London properties and max 60% LTV. You'd have about £360-375k equity, so on paper you're close, but it depends on the valuation. Interest only on £550k at 5% would be about £2,290 a month, but you'd still owe the full £550k at the end.
"Part and part" (some interest only, some repayment) is a more common middle ground. A broker can tell you which lenders would accept you.
I really wouldn't go interest only unless you were really struggling to pay.
5. A tip for the next 10 months
You're paying 2.45%, and easy-access savings currently pay more than that. Rather than overpaying now, consider saving the extra, then using it as a lump sum to reduce the balance when the fix ends. Check your early repayment charge (ERC) rules first. ERC charges will be outlined in your mortgage offer documentation, and most lenders let you overpay 10% of the balance per year.
6. Will things change by July 2027?
Nobody knows. The Bank of England held the base rate at 3.75% this month. Markets are pricing in rises through 2027, while economists surveyed by the Bank expect little change. That uncertainty is exactly why locking in 6 months ahead is useful.
7. What to do now
- Ask DP how the £4-5k was calculated
- Speak to a whole-of-market mortgage broker around - November/December, so you're ready to lock in from January
- Get your current lender's product transfer options at the same time so the broker has something to beat
- A mortgage broker usually has a direct line into all of the main lenders. I do know a good one (no, not me), so if you need that I can somehow put you in touch.
Useful links:
I'm not a financial adviser, so please check everything with a broker. From what you've shared, though, this looks manageable.