What Does a Free Remortgage Include?
A free remortgage deal typically covers two of the main costs associated with switching your mortgage: the valuation fee and the legal fees. The lender arranges and pays for a basic property valuation and appoints a solicitor from their panel to handle the conveyancing at no cost to you.
This can represent a saving of anywhere from £500 to over £1,000, depending on what you'd otherwise pay for these services. For many borrowers, particularly those with straightforward properties and situations, a free remortgage package removes the biggest barriers to switching.
However, it's important to understand that "free" doesn't mean there are no costs at all. There may still be other charges involved, and the interest rate on a free remortgage deal may be higher than on equivalent deals that carry fees.
What Fees Might You Still Pay?
Even with a free remortgage deal, you may face several other costs. The most significant is an early repayment charge on your current mortgage if you're still within the deal period. This is charged by your existing lender, not the new one, so it's never covered by a free remortgage package.
Your current lender may also charge a mortgage exit fee (sometimes called a deeds release fee or account closure fee), typically between £50 and £300. Again, this is a charge from your outgoing lender and isn't included in the new lender's free package.
Some free remortgage deals still carry an arrangement fee or product fee. The "free" element refers specifically to the valuation and legal work, not necessarily to all fees. Always check the full product details to understand exactly what's included and what isn't.
Are Free Remortgage Deals Good Value?
Free remortgage deals can offer excellent value, particularly if you have a smaller mortgage where the savings from a marginally lower interest rate wouldn't offset the cost of paying for your own valuation and solicitor.
However, lenders offering free remortgages sometimes set slightly higher interest rates compared to their fee-paying deals. The reasoning is straightforward: the lender needs to recoup the cost of providing free services somehow, and a slightly higher rate spread across all borrowers achieves this.
The best approach is to compare the total cost of both options over the deal period. Add up all monthly payments and fees for a free deal, then do the same for a fee-paying deal with a lower rate. The option with the lowest total cost is the better choice for your specific situation.
How to Find the Best Free Remortgage Deals
Most major UK lenders offer some form of free remortgage package, including high street banks and building societies. Comparison websites can help you filter for deals that include free valuations and free legal work, making it easier to see your options at a glance.
A mortgage broker can be particularly helpful here, as they can access deals from across the market and compare the total cost of free packages against fee-paying alternatives. Many brokers don't charge a fee themselves, which means you can get expert advice without adding to your costs.
When comparing free deals, pay attention to the details. Check whether the free valuation covers a physical inspection or just a desktop assessment. Confirm that the free legal work covers all disbursements or just the solicitor's own fees. These details can make a meaningful difference to the true cost of the deal.
Important: Your home may be repossessed if you do not keep up repayments on your mortgage. There will be a fee for mortgage advice. The actual rate available will depend on your circumstances. Think carefully before securing other debts against your home.