There can be many benefits to remortgaging. It may enable you to reduce your mortgage rate or release equity in your home. Perhaps you want to undertake some renovations or take that holiday you’ve always dreamt of. When you need to raise some cash, a remortgage could well be your solution.
If you’ve already made the decision to remortgage, you have probably had a go at calculating the costs to ascertain whether it’s a viable option. But calculating the costs of a remortgage is not a simple task so Think Plutus will run you through everything that needs to be taken into account.
We offer guidance with remortgage fees, legal fees, surveyor fees and finding the best rates available. Our advisers are always a phone call away to answer any further questions you may have.
What fees are associated with a remortgage?
Remortgage fees and costs can vary. Here are some of the main expenses you’ll need to account for when deciding whether or not to remortgage:
- Booking fees
- Lender arrangement fees
- Survey/valuation fees
- Solicitor fees
- Early repayment charges
- Mortgage broker fees
The fees a broker requires will depend on their terms and the mortgage they find you, along with your own situation. There will be variation in solicitor fees, but there are some remortgage deals where free solicitor work is included in the package. This will be covered in more depth later on.
There will always be multiple products on offer from each lender, and different costs attached to each product. Let’s take a more detailed look at the costs.
What is a lender arrangement fee?
Lenders always require borrowers to pay a fee for ‘arranging’ a mortgage. Some lenders’ fees are very low, and some don’t charge them at all, while others will charge more than £1,000 in arrangement fees. It will either be a fixed amount or a percentage of the mortgage.
You may wonder why someone would ever pay a fee of £1,000+ when there are other lenders who don’t charge arrangement fees. The simple answer is that mortgage products with arrangement fees are usually better deals overall. The fee can be added to your mortgage, but this will mean interest will be paid on it (as well as the mortgage itself), so it’s better to clear this fee upfront if you can.
Booking fees are another common charge with lenders, but they are usually much smaller than most other fees. They rarely exceed £150, and in some cases, they are as low as £20 – essentially, a booking fee is equitable to an administration charge.
Ultimately, lenders are running businesses, so they will charge borrowers for the luxury of a low-interest mortgage product. To keep your remortgage fees to a minimum, you will need to calculate exactly how much it will cost to enter different remortgage options. There’s no way to tell you whether a deal with or without fees is a better option for you without making an assessment of each mortgage to establish the relevant costs. If you’re having difficulty with this, Think Plutus can give you some clarity.
Do lenders require a survey to remortgage?
It’s possible your lender will carry out a survey of the property you are planning to remortgage. Even if a formal survey is not ordered, lenders will need to confirm that there is adequate security in your property. They also need to be sure that the remortgage amount is right for the market value of your property.
Some lenders throw a free valuation into the deal, while others will charge for this service. As a homeowner, you will not be entitled to select your own surveyor for the remortgage. The valuation fees for remortgages could cost anything from £0 to £1,500, and will depend on the lender, the deal you’ve selected and the size of the loan.
What is an early repayment charge?
You may be liable for an early repayment charge (ERC) if you wish to remortgage earlier than was initially agreed with your lender. Mortgages usually have an introductory period of 2-5 years, and once this initial period has passed then you will be able to remortgage without an ERC. If, however, you want to remortgage earlier, you are open to paying this additional fee.
One of the first things to do when considering remortgaging is to check whether there is an early redemption penalty for your current deal. Knowing this will help you make an accurate calculation of the amount to assess whether an early remortgage is viable. You may learn that it would be more prudent to wait until you can remortgage without paying an ERC.
Fees for early repayment vary. All mortgages have their own unique terms, including the charges for early redemption. Your Key Facts Illustration (KFI) or European Standard Information Sheet (ESIS) will usually give you the exact figure, and some lenders will base the fee on a percentage of the overall loan amount. Others will have a fixed fee.
If you’re hoping to remortgage but struggling to ascertain whether you’ll be liable for an ERC, you can ask an adviser for help.
Choosing a solicitor for your remortgage
When you first bought your home, you hired solicitors to process the conveyancing. Though you already own the property, you will still need a solicitor to remortgage, as it is necessary for solicitors to carry out the legal work relating to your mortgage. This legal work is primarily on the lender’s behalf, since the existing charge from your first lender must be replaced by a charge from your new lender.
The legal work for this process is much less in terms of quantity than is involved with a property purchase. As such, the charges from solicitors are lower with a remortgage. Some lenders even include free solicitors as part of the remortgage package, but this is not true of all of them.
If you wish, you can instruct your own solicitor to process all the legal work independently. The legal fees a lender charges are usually lower than you would expect when you hire your own solicitor. Of course, you may also notice a difference with regards to the level of service you receive.
Some lenders offer cashback incentives to encourage people to use their own solicitor. This can be helpful as the cashback will serve to lower some of the other remortgage fees.
Legal fees often fall within the range of £0 to £800, or perhaps more depending on the value and tenure of your property. Solicitor fees may also be higher if you’re releasing equity with a remortgage, or if you’re switching from a residential mortgage to a buy-to-let one.
What fees do mortgage brokers charge for a remortgage?
If you go with a mortgage broker to identify the best remortgage deal available to you, the brokers will charge a fee for their time and expertise. When you get the best possible deal, you could save anything from hundreds to thousands of pounds over the term of your new mortgage.
Brokers can crunch the numbers quickly and accurately to ensure that the best possible deal is revealed. You can enquire with Think Plutus to learn more.
With whole-of-market access, you can rest assured we’ll find you the best remortgage deal available. Our specialist mortgage advisers can even help if you have issues like adverse credit or little accounting history. To remortgage in the best possible way, Think Plutus.