How much does it cost to remortgage?
This guide highlights some of the possible expenses involved in remortgaging and switching to a different lender, specifically in cases where you’re not selecting a new interest rate with your current lender.
It’s worth noting that many lenders may offer to cover some or all of these costs.
Mortgage Broker Fees: Mortgage brokers typically charge a fee for their services, which can vary depending on the broker and the complexity of your mortgage requirements.
Arrangement fees : Similar to other types of mortgages, remortgage products typically come with a tiered fee structure.
Some remortgage products have no fees, while others come with fees. Generally, the products with higher fees offer a lower interest rate.
Some lenders may charge no arrangement fees, while others may charge several thousand pounds. In general, the arrangement fee can range from £0 to £2,000 or more.
To determine the most cost-effective option, a mortgage broker can calculate the overall cheapest deal for you. In most cases, the fees can be added to the mortgage amount.
Conveyancing fees: Most mainstream mortgage lenders offer incentives to encourage people to switch lenders, including covering basic conveyancing costs.
However, it is important to note that not all mortgage lenders offer this, and the extent of the coverage can vary from lender to lender.
If your new mortgage lender offers to cover the basic conveyancing costs, this typically means that they will pay for the legal work required to transfer the mortgage from your current lender to the new lender.
This may include the cost of the conveyancer or solicitor, the land registry fees, and the valuation fees.
Land Registry fees: When transferring the mortgage, the land registry will need to be updated with the new lender’s details. The cost of this will depend on the value of the property.
Early repayment charges
Early repayment charges (ERCs) are typically payable on a remortgage when you repay your
mortgage or switch to a new lender before the end of your current mortgage deal, such as a fixed rate or tracker rate period.
These charges are intended to compensate the lender for any financial losses incurred as a result of your early repayment, such as lost interest income or administrative costs.
The amount of ERCs payable on a remortgage can vary depending on the lender and the terms of your mortgage agreement.
Typically, these charges are calculated as a percentage of the outstanding mortgage balance, and can range from 1% to 5% or more.
For example, if you have a mortgage balance of £100,000 and your ERC is 2%, you would need to pay £2,000 to your lender if you repay your mortgage early.
In most cases, ERCs will only apply during the tie-in period of your mortgage deal.
This is typically the period during which you are required to stay with your current lender and pay a specific interest rate. Once your tie-in period has ended, you may be able to remortgage or switch to a new lender without incurring any ERCs.
When remortgaging the new lender will need to conduct a valuation of the property to ensure that it is worth the amount that you are borrowing.
Many mainstream mortgage providers in the UK offer free valuation incentives for remortgaging.
This is because they want to attract new customers and encourage existing customers to stay with them, and waiving the valuation fee can be an effective way to do this.
However, it is important to note that not all lenders offer free valuations, and some may only offer this incentive for certain types of mortgages or specific deals.
Where payable the valuation fee can vary depending on the lender and the type of valuation that is required.
Will there be a lot of paperwork to remortgage?
Remortgaging in the UK typically involves some paperwork, but the amount of paperwork required can vary depending on the lender and the complexity of your financial situation.
When you apply for a remortgage, you will typically need to provide documentation to support your application, such as proof of income, bank statements, and details about your existing mortgage.
The legal paperwork involved in a remortgage typically includes the following:
Mortgage Deed: This is the legal document that outlines the terms of your new mortgage with the lender, including the amount of the loan, the interest rate, and the repayment period.
Transfer Deed: This document transfers the legal ownership of the property from you to the lender as security for the mortgage.
Title Information Document: This document provides information about the property, including its location, boundaries, and any legal restrictions or easements that may apply.
Property Information Form: This form provides details about the property, including any alterations or repairs that have been made, and any disputes or issues that may affect the property.
Redemption Statement: This document shows the outstanding balance on your existing mortgage and any early repayment charges that may apply.-
ID and proof of ownership: You will need to provide identification documents such as a passport or driving license as well as proof of ownership, such as a property title or land registry document.
While there is some paperwork involved in remortgaging, many lenders have streamlined the application process.
if you work with a mortgage broker or advisor, they can help guide you through the process and handle much of the paperwork on your behalf.
Can I remortgage for free?
It is possible to find remortgage deals that offer incentives such as free legal fees, free valuation fees, or cashback and there are products available with no arrangement fees. So, yes it’s technically possible to remortgage for free.
While some remortgage products may offer free legal incentives, there may be other products that have associated costs but are more cost-effective overall.
When comparing remortgage products, it’s important to consider not just the upfront costs, but also the overall cost of the mortgage over its lifetime.
This includes the interest rate, repayment period, and any fees or charges that apply. By carefully reviewing and comparing the terms and conditions of different remortgage offers, you can determine which product is the most cost-effective for your individual financial situation.
How often do you have to renew your mortgage?
The frequency with which you need to remortgage in the UK can vary depending on your individual circumstances and the type of mortgage you have.
If you have a fixed-rate mortgage, your interest rate and monthly payments will remain the same for the duration of the fixed term, typically 2, 3, 5, or 10 years.
Once the fixed term ends, you will need to remortgage if you want to secure a new fixed rate or switch to a variable rate mortgage. In this case, you may remortgage every 2-10 years depending on the term of your fixed-rate mortgage.
If you have a variable rate mortgage, your interest rate and monthly payments can fluctuate based on changes in the Bank of England’s base rate or your lender’s standard variable rate.
If your interest rate rises significantly, you may want to consider remortgaging to lock in a more favorable rate.
Other factors that could prompt you to remortgage include changes in your financial situation, such as an increase in income or a decrease in your credit score, or if you want to release equity from your home.
Should I remortgage if my mortgage has early redemption charges?
The decision to remortgage while tied in with early redemption penalties depends on various factors, such as the size of the penalty, the length of the remaining tie-in period, and the potential savings from the new mortgage deal.
In general, if the savings from the new mortgage deal are substantial enough to offset the cost of the penalty and any additional fees associated with the remortgage, then it may be worthwhile to proceed with the remortgage.
However, it’s important to calculate the actual cost of remortgaging to ensure that the savings are significant enough to justify the expense.
Do I need a solicitor for a remortgage?
While it is possible to remortgage without a solicitor or conveyancer, it is generally recommended that you use one to help with the legal aspects of the process.
There is a significant amount of legal work involved in a remortgage, including reviewing the terms of the new mortgage agreement, ensuring that the lender’s requirements are met, and ensuring that the legal transfer of ownership of the property is carried out correctly.
A solicitor or conveyancer can help guide you through the process and ensure that everything is handled correctly.
Additionally, if any issues or complications arise during the remortgage process, a solicitor or conveyancer can provide legal advice and support to help resolve the situation.
Whilst there is a sometimes a cost associated with hiring a solicitor or conveyancer, it can be well worth it to ensure that your remortgage is handled smoothly and without any legal complications.
How can Strive Mortgages help me to remortgage?
By taking into consideration your personal circumstances and goals, a mortgage broker can assist
you with your remortgaging needs by identifying the most appropriate mortgage product for you and handling all the paperwork involved.
With their knowledge and expertise, they can help increase the likelihood of a successful application and help ensure you obtain the best deal possible.