Compare Remortgage Quotes

As with anything to do with property or finance there are costs associated with a remortgage. Not all costs apply in every case, but you should be aware of which costs may apply.

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Typically, the possible costs of a remortgage are as follows:

The early repayment charge

When you borrow money from a bank of building society, they make their profit by charging interest on the money that you borrow. So over the lifetime of the loan, your repayments will be made up of a mixture of capital and interest. You typically pay more interest at the start of the loan, and this will steadily decrease as the capital owed reduces. It may surprise you, but it is not unusual for the money you borrow from your bank or building society to actually be borrowed in turn from elsewhere. Even if this is not the case, the projected profit from your loan is dependent on it running its course. Should you repay your loan early, then some of that profit is lost. For this reason most mortgages have an early repayment charge - this is usually a percentage of the remaining capital of the loan. This means that you must be very careful to assess whether early re-payment is cost effective of not.

For example the total cost of early repayment of you existing mortgage may be £10,000, whereas the money saved by switching to a new deal with your existing or new lender may be £9,000 - In this case it is not worth remortgaging.

You must take into consideration then, how much of your outstanding mortgage you will pay as a charge (typically 1% to 5%), when that money must be repaid, must the money be repaid up-front, or can it be added to the new mortgage and whether it is worth remortgaging at all.

The admin fee / exit fee / release of deeds fee

This is a dubious charge for returning your deeds and other ambiguous administrative costs. You should check carefully to see if there was any mention of this in the original documentation for your mortgage. If you were not give information about an exit fee in writing, then there is a good chance that your lender has no right to charge you. Each mortgage sold should come with a key-facts sheet and a mortgage offer in writing. Check to see what they say. There is no interest on this fee - so sometimes you can pay it at the start of the mortgage and other times at the end. The amount should be fixed, and agreed at the point where the mortgage is taken. This fee can range from anywhere between £0 and £300.

Banks and building societies are regulated. You can read more on this topic here:

Conveyancing fees for your new mortgage

These are payable to a solicitor. It is not unusual for a lender to include a legal package with your remortgage - but you will end up using their preferred solicitor.

The complications come when you want to add someone or to remove someone from the mortgage / deed of the property. You may be borrowing more to buy someone out of the property.

You will need to get a quotation for this work.

Other costs associated with your new mortgage deal

  • Mortgage fees - there are usually two, although not necessarily both.
    • Arrangement fee - This is often a hefty charge and is usually necessary to secure a good rate. It is nominally to cover "administrative costs" - and can be added to your loan. If it is added to your loan, then consider repaying it as quickly as possible to avoid paying interest on it. Just remember the whole point of this fee (which the lender can call whatever they like) is to get more money from you. In addition to the interest on your loan it allows the lender to make a profit. Be careful to weigh up the "low rate" against "high fees" scenario. It may well be the case that it would be less expensive to pay a slightly higher rate of interest and lower fees.
    • Booking fee - this is a usually a smaller charge of a few hundred pound - to "reserve your product" or some other such reason. It is usually non-refundable, and is quick and easy money for the bank - even if your property purchase falls through, or you decide not to go ahead.
  • Valuation fee
    • This is a charge of £300 - £400 which may be waived by some lenders. It is to cover the cost of having the property valued. This is the lender's way of checking that the property is worth what they are lending you to buy it. In the event that you default on your repayments, they can repossess the property and get their money back.
  • Broker fee
    • If you are getting your mortgage arrange through a broker, then they will be paid for their time and involvement. You could be charged, for example, 1% or the cost of the loan, or a fixed fee of a few hundred pounds. It is also worth considering that the broker will be on a commission. Where possible, one should perhaps consider cutting out the middle-man.
  • Your new repayments
    • Don't forget to factor in your new monthly cost for your new mortgage. Can you really afford it?

Disclaimer: eQuoteConveyancing in no way offers financial or mortgage advice. The information on this page is of a journalistic nature only. Please contact an independent financial adviser if you require financial advice.