How Much Does It Cost to Remortgage?

What Fees Do You Pay When Remortgaging?

When you remortgage, there are several potential costs to factor in. These typically include an arrangement fee for the new deal, a valuation fee, legal or conveyancing fees, and possibly an early repayment charge on your current mortgage.

Not every remortgage involves all of these charges. Many lenders now offer free valuations and free legal work as part of their remortgage packages, which can significantly reduce the overall cost. The key is to weigh the total fees against the savings you'll make by switching.

As a rough guide, the total cost of remortgaging in the UK typically ranges from nothing (if your lender covers all fees) up to around £1,500 or more if you're paying for everything yourself. Early repayment charges, however, can push this figure much higher.

Arrangement and Product Fees

The arrangement fee (sometimes called a product fee or completion fee) is the charge your new lender makes for setting up your mortgage. This typically ranges from £0 to £2,000, though some deals with very low interest rates carry higher fees.

You usually have the option to pay this fee upfront or add it to your mortgage balance. Adding it to the loan means you'll pay interest on it for the full mortgage term, so the true cost is higher than the headline figure. Always calculate the total cost over the deal period before deciding.

Some of the best interest rates come with the highest fees, so a lower rate doesn't always mean a cheaper deal overall. Comparing the total cost of the mortgage over the initial rate period gives you a much clearer picture.

Valuation, Legal and Other Fees

Your new lender will need a property valuation to confirm the value of your home. This can cost between £150 and £1,500 depending on the property value, though many remortgage deals include a free basic valuation.

You'll also need a solicitor or licensed conveyancer to handle the legal work. This includes transferring the mortgage from one lender to another. Again, many remortgage packages include free legal work, but if you're paying separately, expect to budget around £300 to £600.

Other potential costs include a mortgage account closure fee (also called a deeds release fee or exit fee) from your existing lender, which is typically between £50 and £300. Some brokers also charge a fee for their advice, though many are paid by commission from the lender instead.

Early Repayment Charges

An early repayment charge (ERC) is a penalty you pay if you leave your current mortgage deal before the initial rate period ends. ERCs are usually calculated as a percentage of your outstanding balance, typically between 1% and 5%.

For example, if you have a £200,000 mortgage and your ERC is 3%, you'd pay £6,000 to leave the deal early. This is often the single biggest cost of remortgaging and can wipe out any savings from a better rate.

To avoid ERCs, the simplest approach is to wait until your current deal ends before remortgaging. Most brokers recommend starting the remortgage process around three to six months before your deal expires, so you can secure a new rate and switch seamlessly.

How to Work Out Whether Remortgaging Is Worth It

The best way to decide is to compare the total cost of staying on your current deal against the total cost of switching. Add up all the fees you'd pay to remortgage, then compare them against the monthly savings over the new deal period.

For example, if switching saves you £150 per month and your new deal is fixed for two years, you'd save £3,600 in total. If the fees come to £1,000, you're still £2,600 better off. But if you'd also face a £4,000 ERC, the sums might not stack up.

A mortgage broker can run these calculations for you and help you find the most cost-effective option. Many offer this advice for free, making it well worth getting a professional opinion before you commit.