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How much does it cost to remortgage?
There are many reasons why you may want to remortgage. Maybe your fixed rate has come to an end, or you may want to pay less each month.
But before you dive in and sign up for that new deal, you need to be aware of remortgaging costs.
It’s important to factor them into the price you are willing to pay. Then you’ll know exactly how much you might be able to save by getting a mortgage with a new lender.
Remortgage fees and costs
Depending on who you remortgage with, you could pay some or all of the below fees and costs:
Early repayment charge
You might have to pay an early repayment charge to your current lender if you remortgage while still under the terms of your current mortgage deal.
It’s usually a percentage of what you still owe on your mortgage, so can cost a lot. Many people try to avoid this charge as it can override any savings made by changing lender.
If you have a mortgage with us, find out more about early repayment charges.
Admin charges
These charges are also known as a deeds release fee. This pays for your current lender to send your solicitor the title deeds. The charge doesn’t always apply but if it does, it’s interest free.
Legal fees
The costs you pay a solicitor to transfer your mortgage to another lender. A solicitor also arranges to pay the outstanding mortgage balance to the lender.
Usually, these fees won’t be as high as those for your original mortgage. If you remortgage to Halifax, you usually won’t need to pay them.
Valuation fees
A new lender will value your property so they know how much it is worth before agreeing on the deal. Fees vary, depending on the size and value of the property, but usually cost up to £1,500. Unlike your first mortgage, you won’t have pay for a homebuyer’s report or a structural survey.
Your new lender will arrange the valuation, although you won’t pay a penny with Halifax.
Booking fees
Sometimes known as an application fee or reservation fee, this secures your new deal. A booking fee can cost around £99 to £250. It’s paid on application and is usually non-refundable.
Arrangement fee
A fixed amount or percentage of the amount you are borrowing. You could pay upfront to avoid interest or add it to your new mortgage. If you choose not to go through with the deal, be aware it is non-refundable.
Broker fee
A mortgage broker is a third party who finds an appropriate mortgage for a customer. They usually work with lots of different lenders and will make recommendations based on the needs of the individual.
Depending on the broker, fees average £500 or your broker might be paid a commission from the chosen lender. If you apply to the lender direct you won't pay a broker fee, and no commission will be paid by the lender, but it will likely mean more effort for you in sourcing and applying for a deal.
When is the best time to remortgage?
When a fixed, tracker or discount deal comes to an end, you are usually transferred to a standard variable rate (SVR) mortgage.
The interest rates on a standard variable rate mortgage are often higher than other types of mortgage.
This can mean you pay more each month. Many people choose to remortgage when their deal is coming to an end, to avoid being placed onto a standard variable rate.
By remortgaging when your current deal ends, you could also avoid paying an early repayment charge. But make sure you read your mortgage agreement closely, so you know when you’re allowed to seek a new mortgage without paying an early repayment charge.
The content on this page is for reference and does not constitute financial advice. For impartial financial advice, we recommend government bodies like MoneyHelper.