Remortgage Costs Explained

If you are still within a fixed or tracker deal, leaving early will usually trigger an Early Repayment Charge. This is calculated as a percentage of your outstanding loan, often between one and five percent depending on how early you exit. Your current deal paperwork will show you exactly what applies. If the ERC is large, it may be worth waiting until your deal ends rather than switching early, though this depends on how much you stand to save on the new rate.

When the ERC is low, switching early can still save money across the full term. When the deal is nearly finished, waiting costs nothing and keeps all options open. When rates have shifted significantly, the saving can outweigh even a meaningful early repayment charge. We always model this calculation for you so you know the net position before making a decision.

New lenders often charge an arrangement fee to set up your mortgage. These range from nothing on some deals to over 1,500 pounds on others. A deal with a higher arrangement fee sometimes comes with a lower interest rate, which can work out better over a two or five year fixed term. We always calculate the true cost including all fees, not just the headline rate, so you are comparing like for like.

Fees can sometimes be added to the mortgage balance if you prefer not to pay upfront, though this means paying interest on them for the remaining term. Adding a 1,000 pound fee to a mortgage at 4.5 percent over 20 years adds around 650 pounds in interest. It is worth knowing that before deciding how to handle it.

Lenders also require a valuation of your property to confirm its current market value. Again, many offer this free as part of their remortgage package. Desktop valuations, where the lender estimates value from data rather than a physical visit, are common for standard remortgages and are typically free. A full physical survey costs more if required.

Leasehold properties and more complex situations can incur higher legal costs. If your property valuation comes in lower than expected, your loan-to-value ratio changes, which could affect the rate you are offered. We prepare you for both possibilities before submission.