How much does remortgaging cost?
The costs involved in remortgaging vary depending on the product and lender, and many can be offset by the savings generated from switching to a better rate. The main costs to be aware of are:
- Early repayment charge (ERC), If you’re switching before your current deal ends, your existing lender will typically charge an ERC, usually calculated as a percentage of the outstanding balance and often tapering down over the deal period. ERCs can be substantial and need to be factored into any calculation of whether switching early makes financial sense
- Exit fee, Some lenders charge a small administrative fee when you close your mortgage with them, separate from any ERC. Also sometimes called a deeds release fee or mortgage exit fee
- Product or arrangement fee, Many new mortgage products carry an arrangement fee, sometimes running to £999 or more. This can often be added to the mortgage, but doing so increases the total amount you repay. Always factor fees into the overall cost comparison rather than comparing rates alone
- Valuation fee, Many remortgage products include a free valuation, but not all. Where a fee applies it typically ranges from a few hundred pounds depending on the property value
- Legal fees, Conveyancing is required when switching lenders. Again, many remortgage products include free legal work, which can eliminate this cost. Where it’s not included, solicitor fees for a straightforward remortgage typically range from a few hundred to over a thousand pounds
