Yes, there are additional fees when it comes to remortgaging. This is a list of all possible fees associated with remortgaging. Whether or not you’ll be asked to pay these fees depends on the lender. Each lender has different remortgaging fees. It also depends on whether or not you’re staying with your current lender, or moving to a new one. Generally, there’ll be less fees if you stay with your existing lender.
Remortgaging fees:
Early repayment charge
Who do you pay this to? Your existing lender
How much do you pay? It’s usually a maximum of around 5% of your mortgage. The percentage is highest the earlier in the mortgage term you want to leave. The percentage gets less the longer you’ve had the mortgage.
An early repayment charge is a penalty applied when you repay your mortgage during the tie-in period. The early repayment charge also applies if you overpay more than is allowed. This is usually the length of time you are on an initial deal e.g fixed for three years.
You are essentially being penalised for breaking the mortgage deal early so the lender uses the fee to recoup some of the interest they’ve lost. The early payment charge is usually a percentage of the outstanding mortgage debt. The charge usually reduces the longer you stay with it.
Make sure you’ve done your calculations properly if you intend to pay it. You would need a remortgage deal that has a lower monthly payment than your current one, so it’s worth the one you’re leaving.
If you do end up paying an early repayment charge, you can decide whether to pay the mortgage lender you’re leaving or increase the mortgage amount you’re applying for from the new lender to cover the charge. Remember, increasing the loan size to cover the cost of this charge can increase your loan-to-value ratio and will put you in a more expensive LTV band.
How to avoid an early repayment fee
If you don’t want to pay this fee, then make sure your mortgage completes after your current tie-in period ends. This is usually when your mortgage incentive period ends e.g the end of a two year fixed rate. It’s really costly to get this wrong, so make sure your solicitor is briefed properly to get the date right too.
Deeds release fee
Who do you pay this to? Your existing lender
How much do you pay? £0-£300
Deeds release fee is sometimes known as an ‘admin charge’. This fee is to pay your existing lender to forward on your title deeds to your solicitor. You don’t pay interest on this fee, so it's a good idea to pay it when you leave your mortgage as the figure doesn't change. You don’t always have to pay this fee as not all lenders charge them.
Mortgage fees and Arrangement fees
Who do you pay it to? Your new lender
How much do you pay? At least up £1,000 but can cost £2,000+
You will probably have at least one mortgage fee, and maybe even two. These fees are the mortgage booking fees and mortgage arrangement fees. The expensive fee that lenders will charge you for is the arrangement fee. The arrangement fee covers the overall cost of a mortgage, along with the interest rate.
Booking fee
Who do you pay it to? Your new lender
How much do you pay? £100-£200
Some lenders charge a mortgage booking fee to secure a fixed-rate, tracker or discount deal. The booking fee is also known as an application fee or a reservation fee. You’ll need to pay this fee as soon as you submit your mortgage application. The fee is non-refundable.
Valuation fee
Who do you pay it to? Your new lender
How much does it cost? £300-£400
Most remortgage packages give this for free, but some don’t and you will have to pay.
Mortgage lenders will need a valuation for their security, so they know that if things don’t work out and you fail to repay they can repossess your property and get an amount for it when it’s sold. You pay the valuation fee when you apply.
Conveyancing fee
Who do you pay? Your solicitor
How much do you pay? Usually around £300
You will need a solicitor when you’re remortgaging. That’s because there’s legal legwork needed to remove the original lender’s interest from the property and to register it to the new mortgage lender. Most remortgages include a free legal package and that means the lender will choose the solicitor.
Mortgage broker fee
Who do you pay? The broker
How much do you pay? Depends on the broker
If you’re using a mortgage broker, then they might charge you a fee. Some brokers are free. Fees can cost anything from a fixed fee of £495 to 1% of the loan amount. What you pay the lender also depends on if the broker is going to keep the commission they get from the lender. You might have to pay upfront, it really depends on the broker.