Typically people remortgage to save money, but there maybe remortgage costs associated with both leaving your old deal and setting up a new one. It’s important to weigh up any remortgage fees against the savings you would make by switching lender. We look at the cost of remortgaging and how to find the right balance when you're changing deals to save money.
Remortgage fees fall into those you may need to pay to leave your existing mortgage deal, and those you'll need to pay to arrange your new deal. Not all lenders charge every type of fee. For example, when some lenders offer a remortgage, solicitor fees are included, and some even offer deals with no fees at all. That said, a fee-free remortgage won’t necessarily offer you the best long-term benefits.
It can be difficult to compare all of the deals available to you and determine whether it's worth remortgaging early or waiting out your deal. This is particularly difficult in the current mortgage when mortgage rates are so volatile, making it tough to know whether it's possible to save at all by remortgaging.
A mortgage broker is going to be an easier option for many trying to compare the benefits of remortgaging with one lender or the next, or now vs later. Time is an important factor when it comes to maximising the benefits, so considering when you should remortgage is equally as important as looking at fees.
Here are some of the different remortgage fees you may have to pay, and their average costs. Keep in mind that not all of fees will apply in all circumstances:
Unless you’re already on your lender's SVR (standard variable rate) it’s likely you'll have to pay ERCs to leave your deal before it's end date.
Fixed-rate deals usually last between two and ten years - but can be longer. Typically you have to wait until the deal terms ends to be able to switch mortgages without paying early repayment charges.
If you’re on a discount or tracker rate mortgage deal, the introductory period acts the same as a fixed-rate period. You'll, therefore, usually need to pay ERCs to leave before the introductory period is over. That said, some longer and particularly lifetime deals won't charge ERCs for the whole duration - so you may be able to leave fee-free within a certain number of years.
When you remortgage, early repayment charges can be the most costly element, as most lenders charge 1% - 5% of your outstanding mortgage balance. This is why many people delay remortgaging until their deal tie-in period has ended.
With most lenders you can secure a new remortgage deal six months before your current deal's end date - which can be a great way to lock in an interest rate that may not be around when your deal ends - especially when future rates are difficult to predict.
Waiting for your current deal to end is the best way to avoid paying ERCs, but personal circumstances may not always allow for this.
If you’re desperate to leave your existing deal, you may be able to avoid paying ERCs immediately, as some lenders let you to increase your loan to cover them. However, keep in mind this will raise the LTV (loan-to-value) of your borrowing, which may affect the rates available to you.
You'll also pay interest on ERCs that are added to your mortgage balance, so it's not always the most cost-effective option in the long term.
Not all lenders charge an exit fee, but it's generally charges whether or not you're leaving the deal early. This means that you could be charged both ERCs and an exit fee to leave some deals.
This is not typically a high cost, and is usually somewhere in the region of £50-£65, but it’s worth considering as part of your calculations if your lender does plan to charge you this type of fee.
Also known as admin fees, deeds release fees are sometimes charged by your existing lender to have your property ownership deeds transferred to your solicitor.
Not all lenders impose this fee, but those that do will usually charge between £50 and £300 for this service.
You don’t have to use a mortgage broker but it can often be very beneficial to do so. They can compare deals for you, including comparing the costs of remortgaging, and help you to decide when is the best time to do so for your circumstances.
Many brokers charge a fee for their services, and this can be fairly expensive. Some charge a flat rate of between £300-£600 and others charge the fees as a percentage of your new mortgage deal, often up to 2% of the total mortgage value.
It’s a good idea to be cautious of those brokers demanding up-front fees, as it’s possible you could lose them, if they're unable to find you a suitable deal!
The good news is that there are some totally fee-free mortgage brokers available, such as our partners at Mojo mortgages.
Whether you're looking to save money with a remortgage or borrow more, comparing deals with the help of an expert broker can help you get the best deal for your circumstances.
When looking at remortgage fees, this will apply in most cases as it's unusual (but not unheard of) for lenders to charge no fees for setting up your new deal. Sometimes known as an arrangement fee, product fee or application fee, it covers administration costs for the lender.
It's one of the higher costs of remortgaging at around £1,000-£2,000, on average - although it can be higher.
Many lenders allow you to add this cost onto the loan, but usually only if you meet the affordability criteria once the fees are added to your borrowing. You'll also pay interest on any remortgage fees added to the loan - meaning this is more expensive in the long term than if you pay upfront.
No but fee-free remortgage interest rates are typically higher to compensate for the lender not charging one. This means that it won't usually be the cheapest option in the long-term if you only consider deals with no fees.
In contrast, those products with the highest arrangement fees generally offer the lowest interest rates.
When you remortgage, solicitor costs are associated with conveyancing - transferring the property deeds from one mortgage to another - just as they were when you took out your original mortgage.
Fees are typically around £300, however, many lenders offer free legal services as an incentive to remortgage with them. Bear in mind, however, that this means you won’t have a choice of solicitors and will have to lender preferred legal services.
Important: Free legal fee offers don’t typically apply if you’re adding or removing someone to/from the title deeds during the remortgage process.
Your new lender will need to carry out a valuation of your home before they can offer you a mortgage with them. The current value helps them to determine the equity you hold, and therefore the interest rate that you qualify for.
Fees vary depending on the surveyors used and the size of your home, but are usually in the region of £300-£500. For larger or more unusual properties this could be as high as £1500, however.
Again, valuation fees are often offered for free when you remortgage, as an incentive to choose that particular lender.
Booking fees are slightly confusing, as they often refer to different aspects of the mortgage application process, and come under many different names. Although, thankfully, they're not often charged nowadays.
The charge is to book (rather than carry out) a new mortgage valuation. Some lenders label it as a reservation fee, as it’s used to secure a particular rate before you go through the full application process. This fee is usually non-refundable, and typically in the region of £100 - £300.
Leaving a deal early to save money on a more competitive rates is less possible in the current market than it was in previous years, as many people will be remortgaging onto higher rates when their deal comes to an end. That said, it may be possible to make savings in certain circumstances, for example, if your property value has risen dramatically.
If your deal is due to end, then it's arguably still cheaper to pay the costs associated with remortgaging, rather than being stuck on a high SVR. It may also be possible to save on remortgage costs with a product transfer to another deal in your existing lender's range.