A remortgage can have a number of benefits, such as reducing your mortgage rates or withdrawing equity to spend how you wish. Maybe you want to renovate your home or treat yourself to a holiday, a remortgage could be the answer.
If you’ve decided to remortgage you’ve perhaps tried calculating the costs of doing so and whether or not it’s a viable option. Calculating the cost of a remortgage can be a demanding task so we’ve decided to write this article to help you through it.
We’ll cover everything from legal fees, surveyor fees, lender fees and how you can get the best rate. You can also contact our advisors at any time with your mortgage questions.Enquire Now
What fees will I be charged to remortgage?
The fees charged for a remortgage can and will vary. Listed below are the fees you’ll need to consider when you remortgage:
- Lender arrangement fees
- Booking fees
- Survey/valuation fees
- Early repayment charges
- Solicitor fees
- Mortgage broker fees
Fees payable to your broker will usually depend on the broker and the mortgage they’ve sourced, along with your own individual circumstances.
Solicitor fees will vary, however some remortgage deals will include free legal work as a part of the mortgage. We will discuss this in more depth further into the article.
Each lender will always have numerous products on offer. Each of the products will vary in what’s charged to the borrower for their remortgage. Let’s take a look at each cost in more detail.
What is a lender arrangement fee?
An arrangement fee is payable to the lender. An arrangement fee is charged to the borrower for ‘arranging’ the mortgage. Some lenders will have little or no arrangement fees whatsoever, whereas some lenders will charge arrangement fees in excess of £1000. Arrangement fees will either be a fixed amount or may be based on a percentage of your mortgage.
Why would someone pay an arrangement fee of £1000 if they can remortgage with a different lender who has £0 arrangement fees? The reason is simple. The best remortgage deals typically have arrangement fees attached to them. You can add the fee to your mortgage, however you will pay interest on this in addition to your mortgage, so it makes financial sense to clear this fee upfront.
Lenders may also charge booking fees, however, they’re usually quite small in comparison with other fees. Booking fees don’t tend to exceed £150 and can be as little as £20. Booking fees are typically charged as an admin fee to book the remortgage.
Lenders are ultimately running a business, so they will charge borrowers for the privilege of a low interest rate. It really comes down to calculating the overall cost of the loan, which includes any additional fees you’ll be paying, such as arrangement fees. It’s impossible to say whether or not deals with or without arrangement fees will save you money without assessing each mortgage and calculating your overall cost. If you’re struggling to do this, our advisors are available to help you.
Do I need a survey to remortgage?
Your lender will generally carry out a survey of the property you wish to remortgage. Each lender will carry out a mortgage survey as they need to be sure that the property they’re lending on meets their criteria. Lenders also need to be sure that the remortgage amount meets the actual market value of the property.
Some lenders may offer free valuations as part of their remortgage, whereas other lenders may charge. It’s important to note that homeowners aren’t able to select their own surveyors for remortgage purposes.
Remortgage valuation fees are normally in the range of £0 – £1500. Survey fees will depend on the size of the loan, in addition to the remortgage deal you’ve selected.
What are early repayment charges?
Early repayment charges or early redemption penalties may be charged if you choose to remortgage during the introductory period of your mortgage. For instance, each mortgage will typically have introductory periods of 2, 3 or 5 years. Once the introductory period has passed, a remortgage should be free of early redemption charges. Nonetheless, if you remortgage prior to the introductory term expiring, then you may leave yourself open to early repayment fees.
It’s important to check whether or not your current deal does pose an early redemption penalty. You can then calculate the amount and assess whether or not it’s viable to take an early remortgage. You may find that it makes financial sense to perhaps wait until you’re able to remortgage without having to pay early repayment charges.
Early redemption penalties will vary. Each lender and their respective deals each have their own early repayment charges. You can usually find the exact figure in your mortgage Key Facts Illustration (KFI). Some lenders may base the fee on a percentage of the loan amount, whereas other lenders may have a fixed fee.
If you hope to remortgage, but you’re unsure of whether or not you’ll be charged an early repayment fee, please make an enquiry below and an advisor will take a look at everything for you.
Selecting a solicitor for your remortgage
You’ll remember that when you first purchased your home, you instructed solicitors to carry out the conveyancing and legal works for the purchase. Although you’re not purchasing the property again, solicitors will still need to carry out legal work in relation to your remortgage.
The legal work required for a remortgage is largely on behalf of the lenders involved with the transaction. This is because the initial charge from your first lender needs to be removed from the property title and replaced with a charge from the new lender.
The amount of legal work involved is a lot less when compared to purchasing a property from scratch. This is reflected in the fees charged by solicitors for a remortgage, as fees are typically lower when compared to a new purchase. Some lenders will offer you free solicitors as part of the remortgage deal, whereas other lenders may charge you legal fees.
You can also instruct your own solicitor to carry out the legal work on your behalf. Legal fees from a lender often tend to be lower than if you were to use your own solicitor, however you may also notice a difference in the level of service you receive. Some lenders will also offer cashback rather than free solicitors if you decide to your own solicitor instead. This can be quite handy as the cashback can then be used to cover some costs of the remortgage.
Legal fees will vary and will start from being £0 but can go up to £400, possibly more depending on the value and tenure of the property. Some solicitors may also charge more if you’re withdrawing equity from the remortgage or changing your mortgage from residential to buy to let.
Mortgage broker fees
If you use a mortgage broker to find you the best remortgage deal possible, then brokers will charge you a fee for their time and expertise. Selecting the right deal can save you hundreds, if not thousands of pounds over the duration of the mortgage term.
Brokers can also do all of the number crunching for you, to ensure that you’re getting the best deal possible. You can make an enquiry with an advisor today for more information. With access to the whole market, you can be sure that you’ll get the best remortgage deal available. We also have specialist advisors on hand if you have adverse credit or your income isn’t well documented.