What Fees Are Involved in Remortgaging?
If you are thinking about remortgaging your home, it is important to understand the potential costs involved.
Remortgaging can be a useful way to lower your monthly mortgage payments, release equity or switch to a different type of mortgage. However, remortgaging fees can sometimes catch homeowners by surprise.
This guide explains the main fees involved in remortgaging a property in the UK. It covers residential and buy-to-let mortgages, as well as fixed-rate and variable-rate mortgage deals.
What Is Remortgaging?
Remortgaging is the process of switching your current mortgage to a new deal. This could involve moving to another lender or selecting a new mortgage product with your existing lender.
Homeowners may choose to remortgage to:
- Secure a more competitive mortgage rate
- Reduce their monthly mortgage payments
- Pay off their mortgage more quickly
- Release equity from their property
- Change from a variable-rate mortgage to a fixed-rate deal
- Change the terms of their mortgage
Before switching, it is important to calculate the total cost of remortgaging rather than looking only at the new interest rate.
Common Fees When Remortgaging
Not every remortgage will involve all of the following fees. Some lenders offer fee-free remortgage products or include a free standard valuation and legal service.
However, the main remortgaging fees UK homeowners may need to consider include early repayment charges, arrangement fees, valuation costs, legal fees and mortgage broker fees.
1. Early Repayment Charges
An early repayment charge, commonly known as an ERC, may apply if you leave your current mortgage deal before the agreed period ends.
Early repayment charges are particularly common with fixed-rate mortgages and discounted mortgage products.
For example, if you have a five-year fixed-rate mortgage and decide to remortgage during year three, your existing lender could charge between 2% and 5% of the amount being repaid early. The exact percentage will depend on your mortgage agreement.
If your remaining mortgage balance is £150,000 and the early repayment charge is 3%, the cost would be:
£150,000 × 3% = £4,500
This could significantly affect whether remortgaging early is financially worthwhile.
Always check your current mortgage offer or contact your lender to confirm whether an early repayment charge applies and when it ends.
2. Mortgage Arrangement or Booking Fee
Many lenders charge an arrangement fee when setting up a new mortgage product. It may also be described as a product fee, completion fee or booking fee.
The mortgage arrangement fee covers some of the lender’s costs associated with arranging the new mortgage.
The typical cost may range from:
£0 to £2,000
A fee of around £1,000 is common, although the amount will vary between lenders and mortgage products.
Some lenders allow you to add the arrangement fee to your mortgage balance rather than paying it upfront. This can reduce the immediate cost of remortgaging, but you will usually pay interest on the fee for as long as it remains part of the mortgage.
For this reason, it is important to compare the total cost of the mortgage deal, including both the interest rate and product fees.
3. Mortgage Valuation Fee
Before approving a remortgage, the new lender will normally assess the value of your property.
The lender uses the mortgage valuation to confirm that the property provides suitable security for the amount being borrowed.
A standard mortgage valuation fee may range from:
£150 to £1,500
For a typical UK property, the valuation could cost approximately £200 to £400. Fees may be higher for larger, unusual or more valuable properties.
Some lenders offer a free standard valuation as part of their remortgage package. You should check what is included before submitting an application.
A lender’s mortgage valuation is not the same as a detailed property survey. A more comprehensive home survey may cost more and is usually arranged separately.
4. Remortgage Legal Fees and Conveyancing Costs
Legal work is normally required when you remortgage to a different lender.
A solicitor or licensed conveyancer may need to:
- Check the property title
- Review the new mortgage offer
- Obtain a redemption statement from the existing lender
- Repay the existing mortgage
- Register the new lender’s legal charge
- Complete the necessary Land Registry work
Typical remortgage legal fees may range from:
£400 to £1,000, including VAT and standard disbursements
For a straightforward residential remortgage, legal costs of approximately £500 to £700 may be common.
Some lenders offer free standard legal work through a solicitor from their approved panel. However, additional charges may still apply if the case involves extra legal work.
You may also be able to appoint your own solicitor, although you should confirm that the firm is accepted by your new mortgage lender.
5. Mortgage Broker Fees
A mortgage broker can help compare remortgage products, assess lender criteria and identify deals that may be suitable for your circumstances.
Mortgage broker fees vary between firms.
Some mortgage brokers do not charge the customer because they receive commission from the lender. Other brokers may charge a fixed fee, percentage-based fee or hourly rate.
A typical mortgage broker fee could range from:
£300 to £500
However, fees can be higher or lower depending on the broker, the complexity of the application and the type of mortgage required.
You should always ask how the broker will be paid and confirm any fees before proceeding.
Fees for Residential and Buy-to-Let Remortgages
The cost of remortgaging can vary depending on whether the property is your home or a rental investment.
Residential Remortgage Fees
A residential remortgage may involve:
- An early repayment charge
- A mortgage arrangement fee
- A valuation fee
- Legal or conveyancing fees
- A mortgage broker fee
- An exit or administration fee from the existing lender
Straightforward residential remortgages may qualify for free legal services or a free standard valuation, depending on the lender and mortgage product.
Buy-to-Let Remortgage Fees
Buy-to-let remortgage fees may be higher because lenders often apply different criteria to rental properties.
Potential costs may include:
- A higher mortgage arrangement fee
- A specialist rental valuation
- Additional legal work
- Mortgage broker fees
- Early repayment charges
- Administration or exit fees
A buy-to-let valuation could cost between £300 and £1,500, depending on the property, lender and type of valuation required.
Legal costs may also be higher if the solicitor needs to review tenancy arrangements, property ownership structures or landlord-related documentation.
Fixed-Rate and Variable-Rate Remortgage Fees
The fees involved can also depend on your current mortgage type.
Fixed-Rate Mortgage Fees
Fixed-rate mortgages are more likely to include early repayment charges during the fixed-rate period.
Leaving a fixed mortgage early could result in a substantial ERC. You should compare this charge against the potential savings available from the new mortgage before deciding to switch.
Variable-Rate Mortgage Fees
Variable-rate mortgages may offer more flexibility and could have lower or no early repayment charges.
However, this is not guaranteed. Some variable-rate and tracker mortgage products still include fees or early repayment conditions.
Always review the terms of your current mortgage before applying for a new deal.
Real-Life Example: Jane’s Remortgage Journey
Jane owns a three-bedroom house in Leeds. She has a five-year fixed-rate mortgage with an outstanding balance of £180,000.
After two years, Jane finds a mortgage with a lower interest rate and considers remortgaging to another lender.
Her potential remortgaging costs are:
- Early repayment charge: 3% of £180,000 = £5,400
- Mortgage arrangement fee: £999
- Valuation fee: £250
- Legal fees: £600
Jane’s likely upfront fees would be:
£5,400 + £250 + £600 = £6,250
She chooses to add the £999 arrangement fee to her new mortgage balance. However, this means interest would be charged on that fee.
After calculating the total cost, Jane realises that remortgaging immediately may not be cost-effective because of the high early repayment charge. She decides to wait until her fixed-rate period is closer to ending.
This example demonstrates why homeowners should compare the total cost of remortgaging rather than focusing only on the new mortgage rate.
How to Reduce Remortgaging Fees
There are several ways you may be able to reduce the costs involved in remortgaging.
Look for Fee-Free Remortgage Deals
Some lenders offer remortgage products with no arrangement fee, a free standard valuation or included legal work.
However, a fee-free deal does not automatically mean it is the cheapest option. The interest rate and total amount repayable should also be considered.
Calculate the Total Mortgage Cost
A mortgage with a lower interest rate but a high arrangement fee may cost more than a slightly higher-rate product with lower fees.
Compare the total cost over the period you expect to keep the mortgage.
Check Your Early Repayment Charge
Find out when your current early repayment charge reduces or ends.
Waiting until the ERC has decreased could make remortgaging more cost-effective.
Speak With a Mortgage Broker
A mortgage broker can compare products, lender criteria, interest rates and fees to help you understand the overall cost of different remortgage options.
Ask Your Existing Lender About a Product Transfer
Your current lender may offer a new mortgage product without requiring you to move to another lender.
A product transfer may involve less legal work and could avoid certain valuation or conveyancing costs. However, it is still important to compare the product with other available remortgage options.
Summary of Remortgaging Fees
| Fee type | Typical cost range | When it may apply |
|---|---|---|
| Early repayment charge | 0% to 5% of the outstanding mortgage | When leaving a mortgage deal before the agreed period ends |
| Arrangement or booking fee | £0 to £2,000 | When setting up the new mortgage product |
| Valuation fee | £150 to £1,500 | When the new lender values the property |
| Legal or conveyancing fees | £400 to £1,000 | When legal work is required to transfer the mortgage |
| Mortgage broker fee | £0 to £500 or more | When using a broker who charges a customer fee |
These figures are general estimates. The actual cost of remortgaging will depend on your lender, mortgage product, property and individual circumstances.
Final Thoughts
Remortgaging can be a useful financial step, but it is important to consider all possible fees before switching.
Early repayment charges, arrangement fees, valuation costs, legal fees and broker charges can affect whether a new mortgage deal will save you money overall.
Understanding your existing mortgage terms and comparing the total costs of residential or buy-to-let remortgage deals can help you make a more informed decision.
Ready to Explore Your Remortgage Options?
At BSL Financials, we specialise in helping homeowners and landlords understand their remortgage options.
We can help you review the potential fees, compare suitable mortgage products and understand whether remortgaging may be appropriate for your needs and budget.
Contact BSL Financials today for a friendly, no-obligation conversation about your remortgage options.
Disclaimer: This blog provides general information only and does not constitute regulated financial advice. Mortgage products, fees and eligibility criteria vary between lenders. Please speak with a qualified mortgage adviser about your individual circumstances.
Your home may be repossessed if you do not keep up repayments on your mortgage or any other debt secured on it.
