Remortgaging fees: how much will remortgaging cost?

If you’re paying a high interest rate on your mortgage, remortgaging could save you a lot of money on your monthly repayments. But how much does it cost? Read our guide to find out if remortgaging is a good choice for you.

If you’re paying a high interest rate on your mortgage, remortgaging could save you a lot of money on your monthly repayments. But how much does it cost? Read our guide to find out if remortgaging is a good choice for you.

Mark Gordon
From the Mortgages team
4
minute read
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Posted 8 MARCH 2021

How much will I have to pay to remortgage my home?

Many mortgage deals are short-term and, once you’ve come to the end of the fixed rate or discount period, you’ll end up on your lender’s standard variable rate mortgage – which is likely to have a higher rate of interest. Almost certainly higher than the latest deals on the market. By switching to a different mortgage, you could save money on your monthly payments and reduce the price you pay overall.

But you can’t always remortgage for free. You may have to pay certain charges to your existing lender, plus fees to your new lender. Then there are the legal costs too. So, when you’re comparing attractive mortgage rates and working out how much you could save, it’s important to weigh that against the costs of remortgaging.

What charges will I pay to my existing lender?

Your mortgage lender won’t want you to leave. They’re relying on all that interest you’re paying... But if you time it right, you shouldn’t have to pay too much to move your mortgage to a new lender.

Early repayment charges
If you decide to leave your mortgage before the end of the term, you may have to pay an early repayment fee. It’s important to check your mortgage terms carefully before you remortgage, since this cost could outweigh any savings you might make from switching to a better interest rate.

Normally, the early repayment charge is worked out as a percentage of the remaining debt on your mortgage, although this rate may reduce as you get closer to the end of the deal. With early repayment charges of up to 5%, remortgaging during this tied-in period could cost you a pretty penny.

How can I avoid paying an early repayment charge?
Early repayment fees only apply for a certain amount of time, so you can avoid paying them by waiting until the end of the tie-in period. The good news is that early repayment charges usually don’t apply once you switch to your lender’s standard variable rate, which is often when you’ll start getting itchy feet.

Deeds release fee
This is essentially an admin charge that you pay to your existing lender to send your title deeds on to your solicitor. Make sure to check your original paperwork, to see what you originally agreed to. The amount shouldn’t change from what was originally stipulated, and if it wasn’t included you shouldn’t have to pay it. It could cost up to £300.

What charges will I pay to my new lender?

Charges will vary, but you may have to pay the following fees to your new lender:

  • arrangement fee – also called a product fee
  • booking fee - also called an application or reservation fee
  • valuation fee

The arrangement fee is one of the main things to look at when comparing mortgages, along with the interest rate.

The cost will vary depending on the lender. Sometimes it’s priced at a fixed amount and sometimes it’s a percentage of the amount you’re borrowing. Some lenders don’t charge an arrangement fee at all. You’ll often have to pay a higher arrangement fee to secure the most favourable interest rates.

Typically, you can choose to pay the arrangement fee upfront or include it on your mortgage total. It’s risky to pay upfront, as you won’t get the money back if the deal doesn’t go through. But, on the other hand, you’ll pay more in interest if you add it to your mortgage. One way of getting around this would be to add the fee to your mortgage initially, but then overpay on your mortgage by that amount once it’s set up.

Some lenders will also charge a booking fee to secure a special deal like a fixed rate, discount or tracker period. Normally, this is only around £100-£200, but you’ll need to pay this as soon as you submit your mortgage application and, unfortunately, it’s non-refundable.

The valuation fee you pay covers a new professional valuation of your home, so your new lender can be sure of what it’s worth. Normally your lender will arrange this, but you’ll have to pay for it upfront.

Costs vary greatly, depending on the size and value of the property, and could be anything from a few hundred to over a thousand pounds. Luckily, unlike when you buy a new home, you won’t need any other surveys and you may occasionally find lenders who’ll cover it as part of their remortgage offer.

As well as the charges to your new and existing lenders, you’ll have to pay legal fees and perhaps other additional costs.

Do I need a solicitor to remortgage?

​A solicitor will need to remove your existing lender from your current contract and register your new lender, but it’s unlikely you’ll have to arrange this yourself - and it’s a much more straightforward process than when you first buy a house.

Some lenders will include a basic legal package to cover this, as part of their remortgage offer. The downside here is that you won’t have any choice over which solicitor they use. If you do have to pay separately, the conveyancing fee should be around £300.

Are there any other costs to consider?

If you decide to use a mortgage broker, you may have to pay brokerage fees for their services. This could be a one-off fee or it could be a percentage of the loan amount. Brokers working on commission from the lender may not charge a fee, however, and using a broker could potentially save you money on your mortgage in the long run.

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