How Much Does It Cost To Remortgage?
- adrian3516
- Jan 5, 2024
- 5 min read
Updated: Mar 20
Thinking about remortgaging your home but unsure of the costs or process? This guide will break it all down, helping you understand the expenses involved and what remortgaging entails. Whether your goal is to reduce monthly payments, release equity, or secure a better deal, it provides the knowledge needed to make confident, informed decisions about your next mortgage.
Should I stick or move to a new lender?
Whether you're renegotiating with your current lender or switching to a new one, the fees involved are not a major concern. While there might be a "closing/account fee" payable to your current lender (so if you change lenders), this is often outweighed by the benefits of securing a better deal. That's why it's crucial to explore your options and find the best deal that suits your situation.
What mortgage fees can I expect to pay?
Regardless of whether you are staying with your current lender or switching to a new one, you'll typically be presented with two options for the same deal. Let's say you've decided that a two-year fixed rate is best for you right now, you'll have two choices:
1) A lower rate but with an Arrangement Fee, typically around £995
2) A higher rate but with no Arrangement Fee
Which option is better for you will simply be down to the size & term of your mortgage – so for those with a smaller mortgage you are most likely to benefit from option 2 as you are unlikely to recoup the arrangement fee despite paying a lower interest rate.
However, if you have a mortgage upwards of, for example, £250,000, you may well find that option 1 is more cost effective despite paying the arrangement fee.
Renewing your mortgage with your current lender usually comes with little to no extra costs. However, other lenders are often eager to win your business and may offer deals with low or no fees too, so you will be wise to shop around.
How Much Does It Cost to Remortgage to a new lender?
Switching to a new lender might not incur additional costs, which may come as a pleasant surprise. However, this ultimately depends on your individual circumstances and the lenders you’re exploring. As mentioned earlier, much like your current lender, the market often pairs competitive rates with arrangement fees. For this reason, it’s essential to look at the bigger picture.
You may incur a mortgage broker fee - check out our Fees Page for a complete rundown on broker fees and what to expect.
Will I need a solicitor?
When you remortgage to a new lender, a solicitor or conveyancer will handle the necessary paperwork. Don't worry, most lenders will either provide their own legal team for free or offer a cashback option to cover these costs. However, there may be other fees depending on your situation / your property, such as additional legal costs for leasehold properties or if you are adding (or removing) someone on your mortgage.
Will my current lender offer me a better deal?
Don't assume your loyalty will be rewarded. While you may be presented with a competitive offer, the process is often all too quick and easy, leading to potential decisions without fully considering your future plans. If you're thinking of moving or anticipate needing additional funds later, it's important to weigh your options carefully.
Rushing into a new deal without proper thought could cost you more over time. That’s why working with a mortgage broker is a smart choice. They’ll not only compare your current lender’s offerings to other options on the market, but once you’ve locked in your next rate, they’ll continue monitoring the market. If a better rate becomes available, they’ll update your application to ensure you get the best deal.
When should I start looking at my options?
Did you know that you can book a new mortgage deal up to six months before your current one ends? But be careful not to jump into a deal with your current lender without considering other options. If you lock in a new rate months in advance and the rates later drop, your lender might not tell you. That's why it's smart to work with a mortgage broker who will keep an eye on interest rates and help you secure the best deal available.
Check out When Should I Look At My Remortgage for more details on this and the general remortgage process.
Can I borrow additional funds?
Sure, subject to status lenders allow you to raise funds for most purposes, the most common of which are to:
Home Improvements to create a more Energy Efficient home
Clear some unwanted debts, loans / credit cards etc.
Purchase another property to let or a holiday home.
Help a family member with a deposit towards their first home.
If you are continuing with your current lender the process of raising additional funds is referred to as a ‘Further Advance’. Remember, this will result in having two parts to your mortgage. Note: if you are taking a further advance mid-term, so perhaps you are halfway through a fixed rate, you should give some consideration to when your new additional loan will end – it is advisable to try to connect both so that they end around the same time.
Do I need an up-to-date valuation of my home?
While you don't necessarily need written proof, it is essential to have a reasonable estimate of your home's value. This will help determine the mortgage options available to you. When switching to a new lender, they will conduct their own checks. Nowadays, most lenders rely on online data / statistics for a current valuation, which usually works well. However, if you have made improvements to your home since purchasing it, these enhancements may not be reflected in the lender's valuation. It's important to inform your mortgage broker about this, as it could significantly impact the availability of suitable mortgage products for you.
For further details on this check out When Remortgaging Who Values My House.
How long does it take to re-mortgage?
Whilst the mortgage process will vary from lender to lender and can therefore be quicker or slower depending on who you use, you should ideally allow for a minimum of 6-8 weeks to re-mortgage your home. As well as securing a new mortgage offer you will also need to collaborate with a solicitor who will organise the transfer from one lender to the next.
My mortgage renews in the next six months, what should I do next?
For complete guidance and support it goes without saying that you should connect with a mortgage broker. They will very quickly determine your best route forward and help map out your next steps towards securing the best deal for your situation.
Check out our Essential Remortgage Checklist for a quick rundown of the steps involved.
If the idea of remortgaging your home feels overwhelming, don’t worry. The process can be simple and cost-effective with the right approach. Think about your future plans and consult a qualified mortgage broker before making any decisions. They can show you the deals from your current lender and explore the market for better options.
Your home may be repossessed if you do not keep up repayments on your mortgage.
You may have to pay an early repayment charge to your existing lender if you remortgage.
Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on your mortgage.
Published by Beechwood Mortgages Ref: 219335 with review and approval from Stonebridge Mortgage Solutions Limited who is authorised and regulated by the Financial Conduct Authority Ref: 454811.
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