How Much Does It Cost To Remortgage?

If you’re considering remortgaging soon, it’s good to know the fees associated with the process. If you decide to remortgage early, you may have to pay early repayment charges to your current lender.

There are also several other fees associated with the remortgaging process, which you may or may not pay depending on your circumstances. We’ve listed them all below so you can run through them and find which ones apply to you.

This will help to get a rough idea of what remortgaging will cost when the time comes to get a new deal.

What costs for leaving your current mortgage will you pay?

If you plan on leaving your existing lender for a new one, you might have to pay some fees to do so. Some of the most common ones are listed below.

Early repayment charge

An early repayment charge (ERC) is a penalty your lender applies if you repay, or make larger overpayments than you’re allowed, during your mortgage term.

You’re being penalised for breaking the deal early, so the fee allows the lender to recoup some of the interest they are losing out on. The fee is often a percentage of the debt still outstanding on your mortgage.

So, if you were on a five-year fixed-rate mortgage, the ERC could be 5% in the first and reduce to 4% in the second year and 3% in the third year. If you had £200,000 remaining on your mortgage, the penalties would look like this:

• 5% penalty:  £10,000
• 4% penalty: £8,000
• 3% penalty: £6,000

As you can see, if you decide to remortgage early, you could end up paying a hefty fee. Unfortunately, there aren’t many ways to avoid an ERC unless you wait until six months before your current mortgage term ends to switch to a new deal.

Unless you can get a good remortgage deal that’s lower than your current one, it’s best to wait until your current term is ending to avoid any ERCs.

Deeds release fee

A deeds release fee is a fee you pay to your existing lender so they can forward the title deeds of your property to a solicitor.

You’re likely to be offered the option of paying this fee upfront or when your current mortgage comes to an end. As the fee doesn’t change and you don’t pay interest, it makes sense to pay it at the end.

The fee will cost you between £50 and £300 but not all lenders charge this fee, so check your agreement to see whether you have to pay it or not.

What costs will you pay for a new deal?

As well as the above fees, there are some other fees you might have to pay so your lender and solicitor can go ahead with your new remortgage deal. We’ve listed some of the most common below:

Valuation fee

A valuation fee is charged by the lender who plans on loaning your mortgage. The fee covers the process of valuing a property to see how much it’s worth, hence the name.

Even though you’re remortgaging, lenders require a valuation for security in case things go wrong. For example, if you fail to make repayments, lenders can repossess your house and have a rough estimate of what they’d get for it.

A lot of mortgage packages will give you a valuation for free, but if you do have to pay, expect it to cost around £300 to £500. Although, in some circumstances, it could cost more (upwards of £1,000) depending on the value of the property.

Arrangement fee

The arrangement fee is one of the main costs of remortgaging. It’s an administration charge made by lenders for arranging your mortgage. It might also be referred to as a product fee or application fee.

If you’re considering a fixed-rate mortgage or discount mortgage, you will likely have to pay this fee. It can be anywhere from a few hundred pounds to 1% of the value of your mortgage.

One thing to pay attention to is the conditions attached to the fee. You might be expected to pay the fee when you submit your mortgage application, and it might not be refundable. Lenders are required to inform whether this is the case when you agree on a deal.

Some lenders might add the arrangement fee to your mortgage, which means you’ll pay more interest over the course of your mortgage.

Another thing to note is that a lot of lenders charge high arrangement fees while offering low interest rates. This is so they rise up mortgage comparison tables. This could mean you pay upwards of £2,000 in some cases. If you want an attractive interest rate, expect to pay an arrangement fee of around £1,000.

Broker fee

If you’re using a broker to help you remortgage, they might charge you a fee for their services. Some brokers don’t charge a fee, so it might be worth checking before you commit to using one.

A broker fee can cost anywhere from a fee of £300 to 1% of the loan amount, which can be expensive depending on the size of your mortgage.

It’s not a good idea to pay this fee upfront, as you may lose it if you decide not to go ahead with the deal. Most brokers allow you to pay the fee once the mortgage completes, although you can’t add it to the loan.

We offer a broker-matching service that pairs you with a broker who can help you get the best deal. Speak to one of the advisors we work with to get an idea of the fees you’ll pay when remortgaging and potentially get access to a better deal.

Conveyancing fee

Conveyancing is the legal process of transferring property ownership to another party. In the case of remortgaging, it refers to moving you onto a new deal. A solicitor usually handles, which is often paid for by the lender.

If you do have to pay the fee it is usually around £350 and will need to be paid upfront.

If you’re adding/removing a partner to/from your remortgage, you will need to tell your solicitor. This requires extra work and won’t be included in any deals offered by lenders. This could cause delays further down the line if you don’t do this at the start.

You won’t require conveyancing if you’re switching to a different mortgage from the same provider, which is known as a product transfer.

Booking fee

A booking fee isn’t very common these days, but some lenders may still charge it. The fee is charged to secure a fixed-rate deal, tracker mortgage or discount mortgage and might also be referred to as an application fee or a reservation fee.

If you do have to pay this fee, it will need to be done when you submit your application. The fee is usually between £100 to £300 and is non-refundable, even if your deal falls through.

Your new monthly repayments

Once you remortgage, your monthly repayments will change from your previous deal. To get an idea of what you will be paying each month, you’ll need to know the rate you’re applying for.

When you have this information, you can use our mortgage calculator below to get an idea of what your repayments will be. You can change the term to see the differences a longer and short term make to your repayments, as well as how much you’d pay over the mortgage term.

When is the best time to remortgage?

The best time to remortgage is usually six months before your current deal ends. If you remortgage before this, you run the risk of paying an ERC for ending your current deal early.

By waiting until you have six months left until your deal ends, you can shop around and get an idea of the deals on the market. The risk of leaving things until the last minute is that you automatically get switched to your current lender’s standard variable rate, which is often at a higher rate.

Most lenders give you three to six months to accept an offer. So you can use this time to secure a deal and time it to start when your current deal ends, avoiding ERCs and the standard variable rate.

Once you accept an offer, it typically takes 4 to 8 weeks to remortgage.

How a mortgage broker can help you

If you’re considering remortgaging and wondering how much the process might cost, it’s a good idea to speak with a mortgage broker who specialises in remortgages. They can walk you through the remortgaging process, give you an idea of the fees you might pay and potentially help you get a good deal.

Just call us on 0808 189 2301 or make an enquiry and we’ll do the rest. We’ll simply ask for a few details and from there can find the broker to suit – it’s completely free and there’s no obligation, just the chance to find the right lender with expert support at your side.