How much does it cost to remortgage your home?
Remortgaging your home can save you lots of money in the long run – but the actual process of remortgaging doesn’t come for free. There are many fees involved in remortgaging, so it’s always worth working through these properly to see if switching lenders is actually a better deal after all.
Early repayment charges
These fees are imposed by your current lender if you repay or overpay on your mortgage during a fixed period. If you remortgage your home, your lender will lose money in interest charges, so they will impose early repayment charges to make up for this. As an example, you could find that on a three-year tracker mortgage that your early repayment charge is 3%. You’ll need to calculate this charge into your remortgaging plan. You can decide whether to pay your lender this charge upfront, or whether to put it into your new mortgage with a new lender, but the latter could be more expensive as it could increase your loan to value (LTV) ratio. To avoid having to pay early repayment charges, consider remortgaging after a fixed deal ends (such as a two-year fixed rate mortgage), and you are put on a Standard Variable Rate (SVR).
Deed release fees/administration charges
This is paid to your current lender and pays for them to forward on your deeds to your new lender. Some lenders may offer you the option to pay this when you initially set up your mortgage with them, or when you leave them. As a note of caution, some lenders have been known to charge higher amounts for administration charges than initially agreed at the outset when you first took out the mortgage with them. Always check your mortgage offer and key facts document in detail to ensure that you are not being over-charged. You should not pay for more than you have agreed to in writing. Not all lenders charge deed release fees, but many do. They can cost up to £300.
This is a fee that you pay to your new lender for setting up your new mortgage deal. You’ll normally have the option to pay this upfront or have the choice to add the arrangement fee to your mortgage. If you decide to add it to your mortgage, remember that you will pay interest on it.
These are also known as ‘reservation fees’. This type of fee is what some lenders charge to secure a tracker, fixed rate or discounted rate mortgage. Fees normally range between £100-£200, and will normally be paid as part of the application process (meaning that they are non-refundable).
A valuation will be required by a lender so that they have some financial security in the event that you do not keep up with your mortgage repayments and they have to repossess your property. Some remortgage deals will offer a valuation fee for free, while others will mean that you have to pay between £300-£400.
You’ll need to pay a solicitor to complete the legal process of registering with a new lender. Many remortgage deals include conveyancing fees, with the lender selecting the solicitor of choice. The down side to this is that the lender is most likely to choose a solicitor with cheaper rates, so the service and speed of the re-mortgage process may be slow. If you’re making changes to your remortgage deal such as the amount you want to borrow or the people named on the mortgage, this will usually cost around £300-400 in legal fees and will not be included in the free package offered by a lender.
If you need advice on remortgaging fees and would like more detailed guidance, get in touch with us at iam Mortgages via phone or by filling in an enquiry form. Our helpful team of mortgage experts can advise you on the right remortgage deal for your circumstances.