There are a number of different fees and costs to be aware of if you are considering remortgaging and it is important that you are aware what fees will be applicable so that you can work out if it is worth remortgaging or not. Some fees will not apply to you, but knowing what costs may be applicable should give you a rough idea of how much it will cost you to remortgage.
It is important to be aware that you may incur costs for leaving your existing mortgage deal early and so costs are not just associated with your new mortgage deal.
Your existing mortgage lender may apply an early repayment charge to the amount required to repay your existing mortgage and this is something that you would have been made aware of in your mortgage offer. Early repayment charges usually apply to mortgage products that are a fixed rate of interest for a set period of time, typically 2, 3 or 5 years. The early repayment charge is payable if you want to leave the mortgage before the fixed period has expired. The charge is usually a percentage of the outstanding mortgage debt and it often reduces the longer you stay with the product. If you think an early repayment charge will be payable on your existing mortgage, you should speak to your lender to find out exactly how much it will be. If you dint want to pay this fee, you are best to wait to remortgage until after the fixed period of interest has expired.
Some lenders may also charge you a deeds release fee and you can check your original mortgage offer to see if this fee will be payable. A deeds release fee is not charged by all lenders, but if it is charged, it can be anywhere between £50 – £300.
In relation to a new mortgage, you may be charged a product or arrangement fee. Lenders often give you the option to pay the arrangement fee upfront or you can ask for the fee to be added to the mortgage loan. If you choose to add the arrangement fee to the mortgage, you will pay interest on it so it will cost more in the long run (but it does mean you don’t have to pay it straight away if you cannot afford to).
A valuation fee is sometimes payable on a new mortgage, but some lenders do not charge for this as part of a remortgage deal. If the valuation fee is payable by you, it can cost between £200 – 500 depending on the value of the property and it will be payable on application.
Remortgaging does involve legal work and a conveyancing solicitor will need to be appointed to carry out the legal work for your lender and you. A conveyancing solicitor will need to review the title of the property, obtain redemption figures for your existing mortgage to ensure there are sufficient funds to pay this mortgage off on completion of your new mortgage, review and prepare a report for you on your new mortgage offer, send the mortgage deed to you to sign and register the new mortgage at the land registry.
If you have used a mortgage broker, their fee may also be payable by you, there are a lot of brokers who are fee-free so you may want to bear this in mind when you are choosing a mortgage broker.
