When considering a remortgage, you should take into account the monthly repayments as well as any associated fees and early repayment charges that may apply. This will help you work out exactly how much you will be saving by remortgaging.
Below are some of the fees that may apply:
Remortgage Arrangement fees
Many lenders charge an arrangement fee to set up a new mortgage. The amount charged varies depending on the lender – with some not charging a fee at all. Some will be a fixed amount whereas some will be charged on a percentage of the overall loan.
You can either pay the arrangement fee up front or add it to the mortgage. Doing so may save you money in the short-term however it is worth noting that you will pay interest on the fee over the term of your mortgage. Paying the fee upfront avoids this.
Mortgage Booking fees
Some lenders will charge a booking fee which is payable to secure the mortgage deal you want. This is payable upfront on application of your mortgage and are non-refundable. They tend to range anywhere between £100-£200.
Remortgage Legal fees
Legal fees are payable to the solicitor/conveyancer who carries out the legal work necessary for your remortgage.
Some mortgage deals include free legal work as an incentive – in this case the lender will appoint their own solicitor to act on behalf of them. You will still need to pay for any additional work such as a transfer of equity (adding or removing someone from the mortgage).
Remortgage Valuation fees
A valuation is necessary for the lender to know exactly how much your property is worth. The valuer/surveyor is usually appointed by the lender themselves. You will be expected to pay the appropriate valuation fee which can range anywhere between £200 and £1,500.
Some mortgage deals offer a free valuation as an incentive.
Mortgage Early Repayment Charges (ERCs)
To leave your current mortgage deal, you may have to pay an Early Repayment Charge. You should always check how much this will be before remortgaging as the ERC may be more than the overall savings you would make by moving to another deal.
Some early repayment charges can be a percentage of your loan whereas some will reduce with time.
Mortgage Exit fees
Lenders sometimes charge an administration fee when you pay off your mortgage or switch to another deal – this is known as a Mortgage Exit Fee.
Remortgage deals with no fees
As mentioned before, some lenders do not charge a valuation fee and some do not charge any legal fees. There are deals which have no fees applicable at all! We are able to advise on the best deals to suit your individual needs