The below table shows an estimate of the possible remortgage costs and fees applicable on a remortgage matter:
|Typical Cost Range
|Early Repayment Charges (ERC)
|Varies (percentage of loan)
|Applicable if remortgaging before the current term ends; can be a substantial cost.
|Deed Release Fees (Exit Fees)
|£50 - £300
|Charged by the current lender for closing the existing mortgage.
|£0 - £2,000+
|Charged by the lender for arranging the mortgage; can be a significant amount.
|£150 - £1,500
|Varies based on property value; some lenders may waive this fee.
|If using a mortgage broker; some may be commission-based and paid by the lender.
|£100 - £200
|For securing a specific mortgage deal; not always applicable.
|£300 - £1,000
|Necessary for handling legal aspects of the remortgage; costs depend on complexity.
|Higher Landing Charges
|Applicable for mortgages with a high loan-to-value ratio.
|Costs for updating or taking out new home insurance policies.
These costs can vary based on individual circumstances, the lender, and the specific terms of the remortgage deal. Some fees may be negotiable or waived, so it's beneficial to shop around or consult with a mortgage advisor for the best terms.
Remortgage costs when leaving your current deal
When exiting your current mortgage deal, two of the main costs you may encounter are the Early Repayment Charge (ERC) and the Deed Release Fee (also known as an Exit Fee).
Generally, the longer you have left on your fixed term contract the higher your fee will be. However, the total amount that you will have to pay is dependent on various factors.
These include the type of mortgage you have and how much you have left to pay.
Here's a breakdown of what each of these fees entails:
1. Early Repayment Charge (ERC)
This is a fee that your current lender may charge if you repay your mortgage early, typically during a fixed-rate, tracker, or discount mortgage deal period.
The ERC is usually a percentage of the outstanding mortgage amount. The percentage can vary depending on the terms of your original mortgage agreement and often decreases over time. Most lenders will charge between 1 and 5%.
The charge compensates the lender for the interest they lose because of the early repayment.
To avoid this fee, you can wait until your current deal's initial period is over, or you can check if your mortgage deal allows a certain amount of overpayment without penalty.
2. Deed Release Fee
This is a fee charged by your lender for processing the legal work involved in closing your current mortgage account. Unlike the ERC, the deed release fee is typically a fixed amount, stipulated in your original mortgage terms.
The cost can vary between lenders but is usually in the region of £50 to £300. It covers the administrative costs of removing the lender's interest from the property deed, effectively releasing the deed back to you or your new lender.
Remortgage costs for getting your new deal
When securing a new mortgage deal, there are several costs you might encounter. Here’s an explanation of some common fees:
1. Arrangement Fee
This is a fee charged by the new lender for setting up the mortgage. It's sometimes referred to as a product fee or completion fee. It can vary significantly.
This fee can often be added to the mortgage amount, but doing so means you'll pay interest on it over the term of the mortgage.
2. Valuation Fee
This fee covers the cost of the lender assessing the value of the property you wish to mortgage. Depending on the property's value and the type of valuation. Some lenders might offer free valuations as part of their mortgage deal.
3. Broker Fee
If you use a mortgage broker, they might charge a fee for their service in finding and arranging your mortgage. Broker fees can vary widely. Some brokers are paid via commission from the lender and may not charge you directly. A good broker can often save you money in the long term by finding the best deal for your circumstances.
4. Booking Fee
Also known as a reservation fee, this is charged on some mortgage products to secure a particular deal and the cost can vary. This fee is usually non-refundable, even if the mortgage doesn’t go ahead.
How much is the legal fee for a remortgage?
The legal fee for a remortgage in the UK. This fee covers the cost of a solicitor or conveyancer to handle the legal aspects of the remortgage process.
The exact amount can vary depending on factors such as the complexity of the remortgage, the property's location, and the solicitor's rates.
Some lenders offer remortgage deals that include free legal work, which can be a cost-effective option. However, it's important to compare the overall package as deals with free legal fees might have higher interest rates or other costs.
When budgeting for a remortgage, it's advisable to get quotes from several solicitors or conveyancers to find the best deal for your specific circumstances.
Is a solicitor required for a remortgage?
Yes, a solicitor or a licensed conveyancer is typically required for a remortgage in the UK. Their role is to handle the legal aspects of the remortgage process, which includes:
- Legal Checks: They conduct necessary legal checks on the property.
- Title Deeds: They ensure the title deeds of your property are in order and manage the transfer of these deeds from your old mortgage lender to the new one.
- Existing Mortgage: They liaise with your current mortgage lender to obtain the redemption statement (the amount needed to pay off your current mortgage).
- New Mortgage: They work with your new mortgage lender to ensure all their legal requirements are met.
- Funds Transfer: They oversee the transfer of funds from the new mortgage to pay off the existing mortgage.
- Updating Records: They ensure that the Land Registry records are updated to reflect the new mortgage lender.
Some lenders offer remortgage deals with free legal work, where they appoint a solicitor or conveyancer to handle the process. While this can be cost-effective, it's important to ensure that the appointed professional is thorough and communicative to avoid any potential issues or delays. If you prefer, you can choose your own solicitor or conveyancer, but this will typically be at your own expense.