How much does it cost to remortgage?
Before you decide to re-mortgage it is essential that you factor in the many associated costs and fees to work out if it is worth your while to proceed. These will include:
- Early repayment charges: If you choose to leave your existing fixed rate, tracker or discounted mortgage before the end of its term, then you will usually have to pay a penalty charge to your current lender. This is often between 1% and 5% of the outstanding mortgage loan (depending on how long has elapsed on the term). Alternatively, you may be charged a percentage of the original loan amount, a percentage of the amount already paid or interest on a set number of months. Whichever it is, be sure that the benefits of your new deal are significant enough to offset any loss here.
- Exit fees: This is an administrative fee, charged by your existing lender, to close your mortgage account and pass on the title deeds to your solicitor. They tend to cost between £50 and £300.
Remortgage fees from your new lender: There are two main types of fee associated with moving a mortgage account, although some lenders will offer them as a free incentive.
- Arrangement fees are charged to cover the cost of setting up or ‘arranging’ the new mortgage and can cost as much as £2,500 although a lot of lenders offer a no arrangement fee product.
- Booking fees of between £100-200 can also be charged to secure a mortgage rate deal.
- Legal fees: There are an assortment of legal fees to pay when you re-mortgage, although they tend to be much lower than for new buyers as there is less legal work involved. In addition, many re-mortgages now include free legal or cash back packages. These will include a VALUATION FEE of, approximately, £300-400; conveyancing fees and (possibly) brokers fees.