Understanding the Costs of Remortgaging – What to Budget For

In this blog post, we’re going to dive into an important aspect of remortgaging that every homeowner should be aware of: the costs involved. The amount you’ll pay to remortgage your home can vary significantly based on several factors. We’ll break down these costs and help you make an informed decision when choosing a new mortgage deal.

Product Fees

The first cost you’ll encounter during the remortgage process is the product fee, also known as an arrangement fee or application fee. This fee typically covers the administrative expenses associated with setting up your new mortgage. However, it’s essential to be aware that some lenders may offer lower interest rates while charging higher product fees to recoup their costs. Product fees can range from £1000 to approximately £2000. While you have the option to add this fee to your mortgage, keep in mind that doing so will result in additional interest costs over the life of your loan.

Valuation Fees

Lenders require a property valuation before approving your mortgage. Fortunately, unlike when purchasing a new home, you won’t need to pay for a homebuyer’s report or structural survey during a remortgage. Valuation fees can be up to around £400, but many lenders offer free valuations as part of their remortgage deals.

Solicitor Fees

As with any mortgage transaction, legal work is involved in the remortgage process, requiring the services of a solicitor or licensed conveyancer. While some remortgage deals offer free legal services, if you have to cover these costs yourself, they can range from approximately £300 to £500 on average.

Early Repayment Charges

If you’re still within your tie-in period with your current lender, they will impose early repayment charges if you choose to pay off your mortgage early. To avoid this fee, it’s usually best to wait until your deal period ends before remortgaging. However, if you’re unable to do so, you might consider increasing the size of your new mortgage to cover these charges. The cost of early repayment charges is not fixed but typically ranges from 1% to 5% of the remaining mortgage balance at the time of your remortgage.

Admin/Deed Release Fees

This fee covers the administrative costs associated with transferring your property’s title deeds to the new lender. While some mortgages allow you to pay this fee upfront at the start of your loan, the cost remains the same whether paid upfront or over time. Admin or deed release fees usually range from £50 to £300, although some lenders may not charge this fee at all.

In conclusion, remortgaging your home comes with various costs that you should budget for when considering a new mortgage deal. These costs include product fees, valuation fees, solicitor fees, early repayment charges, and admin or deed release fees. Understanding these expenses and factoring them into your decision-making process will help you make an informed choice.

If you have any questions about the costs of remortgaging or any other aspects of the process, please feel free to contact a member of our team at 01925 573 328.

*UK Mortgage Centre is a Trading Style of The UK Mortgage Centre Group. The UK Mortgage Centre Group is authorised and regulated by the Financial Conduct Authority – FRN 826982. Registered in England & Wales: 11614569. As a mortgage is secured against your home, it could be repossessed if you do not keep up the mortgage repayments. The Financial Conduct Authority does not regulate some forms of buy-to-let mortgages. The Financial Conduct Authority does not regulate will writing and taxation and trust advice.