Remortgage Fees & Costs Explained

Depending on the mortgage, you may encounter product fees, legal costs, valuation charges and fees for leaving your existing lender. Some remortgage products include free valuations, legal services or cashback, meaning the amount you need to pay upfront could be relatively small.

Understanding the possible costs—and comparing them over the right period—will help you decide whether moving to a new lender offers better value than staying where you are.

Remortgaging usually means replacing your current mortgage with a new one from a different lender without moving home.

The new mortgage is used to repay the existing lender, and your property becomes security for the new mortgage.

Moving onto a new deal with your current lender is normally called a product transfer.

This can involve fewer checks and little or no legal work, but it is still important to compare the available product-transfer rates with remortgage options elsewhere.

The three broad choices at the end of an existing deal are:

• Remortgage to another lender
• Take a new product with the existing lender
• Move onto the existing lender’s standard variable rate

The most suitable option depends on the products available, your circumstances and the full cost of making the change.

Many mortgage products have an arrangement fee, sometimes called a product fee or completion fee.

Some lenders offer a choice between:

• A lower interest rate with a product fee
• A higher interest rate without a product fee

It may seem logical to select the lowest interest rate, but that is not always the cheapest option.

The value of a lower rate generally increases with the size of the mortgage. On a larger balance, the monthly saving could outweigh the fee. On a smaller balance, paying a substantial fee to obtain a slightly lower rate may cost more overall.

The correct comparison should include:

• Monthly payments during the initial deal
• The product fee
• Any cashback
• Other fees or incentives
• The mortgage balance at the end of the comparison period

Looking only at the initial rate or monthly payment can produce the wrong result.

Some mortgage brokers charge clients for their advice and application service, while others do not.

The charge may be:

• A fixed fee
• A percentage of the mortgage
• Payable when advice is provided
• Payable when the application is submitted
• Payable when the mortgage completes
• Split across different stages

Mortgage brokers will normally also receive a procuration fee from the lender when a mortgage completes. Any fees and commission should be explained before you agree to proceed.

Paying a broker fee does not necessarily mean you will receive a wider selection of mortgages or a better interest rate. Equally, the value of advice should not be judged by price alone. Consider the service provided, the range of lenders considered and the broker’s experience with your circumstances.

Crescent Mortgages does not charge a broker fee for mortgage advice.

Before approving a remortgage, the new lender needs to be satisfied that the property provides suitable security and supports the requested loan-to-value.

The lender may use:

An automated valuation
A desktop assessment
An external or drive-by valuation
A physical inspection

You do not normally choose which method the lender uses.

Many remortgage products include a basic valuation without a separate charge, but this is not guaranteed. A fee may depend on the lender, product and property value.

The lender’s valuation is for mortgage purposes. It is not a detailed survey of the property’s condition and should not be treated as one.

The valuation can also affect the products available. If the property is valued below your estimate, your loan-to-value could be higher, potentially moving the application into a different product band.

Legal work is usually required when moving a mortgage from one lender to another.

The solicitor or conveyancer will typically:

• Obtain a redemption statement from the existing lender
• Check the property title
• Meet the new lender’s legal requirements
• Repay the existing mortgage
• Register the new lender’s charge
• Transfer any remaining money where appropriate

Many remortgage products offer either a standard legal service or cashback towards legal costs.

A lender-provided legal service may be sufficient for a straightforward remortgage, but additional charges can apply where the work falls outside the standard service.

Examples can include:

• Adding or removing someone from the mortgage or title
• Leasehold supplements
• Unregistered properties
• Shared ownership
• Help to Buy or other secured loans
• Restrictions or defects on the title
• Additional borrowing
• Separate legal representation
• Bank-transfer and identification charges

Cashback allows you to appoint your own solicitor, but the payment may not cover the entire bill. The legal quotation and cashback should therefore be compared rather than assuming either option is completely free.

An early repayment charge, or ERC, may apply if you repay your existing mortgage during its initial deal period.

This is often one of the largest potential remortgage costs. It is commonly calculated as a percentage of the amount repaid, although the exact structure varies.

Before applying, check:

• When the existing deal ends
• Whether the ERC reduces during the deal
• The date from which it no longer applies
• Whether the lender permits an application before that date
• How long the new mortgage offer will remain valid

It may sometimes be worthwhile paying an ERC to access a new deal, but only where the expected benefit outweighs the charge and other switching costs. In many cases, arranging the remortgage in advance but completing after the charge ends will be more appropriate.

Your existing lender may charge an exit fee when the mortgage is repaid.

This may be described as a mortgage exit administration fee, deeds-release fee or account-closing fee. It is separate from an early repayment charge and can sometimes apply even when your initial deal has already ended.

The amount should be shown in your original mortgage documents or a current redemption statement.

There may also be smaller administrative expenses, such as electronic transfer, identification or document fees, depending on the lender and solicitor.

No. Remortgaging may offer better value, but it should not be assumed to be the right answer every time.

Staying with your existing lender could be more suitable if:

• Its product-transfer rate is competitive
• You would not pass another lender’s affordability assessment
• Your income or credit history has changed
• The property is difficult to mortgage
• The mortgage balance is relatively small
• Switching costs outweigh the potential saving
• You need to complete the change quickly
• An early repayment charge still applies

A product transfer can often be completed with fewer checks and without a new valuation or solicitor. However, convenience alone does not confirm that it offers the best overall value.

The available options should be compared on a like-for-like basis.

A useful comparison should look beyond the headline interest rate and include:

Monthly payments
Product fees
Broker fees

• Valuation costs
• Legal fees or cashback
• Early repayment charges
• Exit and administration fees
• Incentives
• Overpayment allowances
• The outstanding balance at the end of the deal
• The period for which you expect to keep the mortgage

You should also consider whether the new mortgage provides the flexibility you need. A slightly cheaper deal could be unsuitable if it carries substantial early repayment charges and you expect to move home.

It is sensible to begin reviewing your options several months before your current deal ends.

Starting early gives you time to check your property value, gather documents, compare a product transfer with a remortgage and deal with any issues that arise.

A mortgage offer may remain valid for several months, depending on the lender. This can allow the new application to be arranged in advance while timing completion to avoid an early repayment charge.

At Crescent Mortgages, we compare the available options by looking at the interest rate, fees, incentives and expected mortgage balance—not simply the lowest advertised rate. We can also compare a new lender with the products available from your existing lender.

Our mortgage advice is fee-free, so you will not pay us a broker fee for arranging your mortgage.

Your home may be repossessed if you do not keep up repayments on your mortgage.