Remortgage Fees - Frequently Asked Mortgage Questions

Hi guys Dan and Kye here again from Crescent Mortgages and today we're going to be discussing the fees and costs incurred when you remortgage.

It can vary from mortgage to mortgage but there are generally a select few that will likely come up and often remortgaging can be a lot cheaper than people think it will be.

So let's jump into it!

Before we do, just to remind you, that we are CeMap qualified mortgage and protection advisors with around 20 years combined experience in the industry, so not bad eh?

All right let's jump into it!

Okay so the fees incurred when you remortgage.

Now some of these fees will pop up when you purchase as well so some of them are still applicable but today we're focusing on the cost of remortgaging because again remortgaging generally is the right thing to do 99% of the time when your current scheme comes to an end whether that be with your existing lender or moving to a new lender.

Today we're focusing on the cost of moving to a new lender so shopping around across the market. There there are maybe four fees that we want to cover today, that are generally the main ones that could pop up and I think we'll probably cover them in descending order of cost, so starting with what can typically be the most expensive and going down from there. So number one, arrangement fees.

So an arrangement fee is a fee charged by the lender and that is a fee that is ranging anywhere from nothing to maybe £2,000 top end, with the average normally £1,000 if you pay one, and often lenders will have two products for each scenario. One will have a fee and one won't so you can choose generally and it's trying to explain to people that actually arrangement fees aren't a bad thing of course no one likes fees but they're not a bad thing because you have the option of either going for the scheme with a lower interest rate but where you have to pay a fee or going for a scheme with a slightly higher interest rate but where you can usually avoid the fee.

So you have the choice and it usually determined by the size of your mortgage if you have a particularly big mortgage it's usually cheaper to go for the lower rate and pay a fee because you'll save more on that monthly payment if you have a smaller mortgage usually cheaper to go for a slightly higher rate but avoid the fee because that interest rate has less of a bearing on your monthly payment.

That's one where some comparison sites will tell you that and some won't, some brokers will take you that and some wont but really a broker should always see what it costs you over the two years. Your broker should be working out the overall cost and which one's cheaper for you because if you go directly to your bank they don't always do that they'll sometimes just give you a list and say take your pick and you're left to kind of do the calculations to work out which one you think is the best and we do see some clients making mistakes there.

Just quickly with the arrangement fee probably a really important point here it can be added to the mortgage most of the time so you don't have to worry about using your savings to cover it, it can usually be added to the loan and just wrapped into the mortgage which maybe increases your payment by a couple of pounds depending on the term of your mortgage, so even though that's arguably the biggest fee normally it can be added to the mortgage, so there's not actually any kind of outlay yourself.

Next one broker fees! So broker fees, these can vary hugely, they can be very big, even a percentage of the mortgage perhaps, it could literally be thousands of pounds and they again can be added on or sometimes brokers charge up front, they do change in shape and size.

How low can they be?!

In theory and it sounds ridiculous, they could be nothing!

Is it just theory?

It's not actually, no because we actually charge nothing...

Yeah that's our own little promo and we should just highlight that if a broker doesn't charge a broker fee that doesn't mean there's a sacrifice in as far as the rates that you get, the service that you get, every broker is paid a percentage by the bank at the end of the process some will choose to charge you a fee on top others won't so there are few fee free brokers such as ourselves when you get the same options the same service but you just don't charge your broker fee. I mean look if you've already got a broker you know they charge a fee but you're really really happy with them you've got a great relationship with them that we're not going to hold it against you if you do pay them a fee, but there are fee free brokers out there these days, so if you can find a good fee free broker it's a bit of a no-brainer really, there's nothing to lose. That's broker fees, the next one I don't know if I'd say descending order that the prices can vary probably, valuation fees.

So when you remortgage the new lender will need to do a valuation. They'll normally send a surveyor either to the property or they may just do a drive by valuation or just an online desktop valuation, you've got no control over which one they do but they will just need to do some form of basic valuation for their own due diligence. Most lenders give a free valuation on a remortgage these days so the chances are, nine times out of ten you won't have to pay for it, and if you do go for a scheme that does charge for a valuation because that lender, let's say they've got a ridiculously good interest rate, so perhaps it's worth it with the overall cost, that the valuation fee can be very very cheap. Some just maybe charge a hundred pounds for example but more often than not that's free.

And then the final one to cover, legal costs, so you'll need a solicitor to move from one lender to another. Don't worry it's a lot less complicated and a lot less money than when you buy or when you bought, but again you'll normally get two options with solicitors you'll either get an option where they'll sell the free legal work or fee assisted legal work, it varies ever so slightly where it will cost nothing or almost nothing and then you get other scenarios where lenders might give you cash back, you know £250, £500 maybe and you source your own solicitors, which often your broker will help you source for you.

Sometimes that works out cheaper sometimes it doesn't but generally speaking if you are paying for solicitors and you're getting cash back or their fee assisted it's tens of pounds.

Either way you'll normally just have to make make up the shortfall which providing it's just a standard freehold property that you're purchasing might be £50 but maybe £100 tops, usually that you have to make up the difference so again it's normally there or thereabouts. 
Kind of nothing for the legal costs as well like I say if there are you know maybe probably no more than £100 depending on the details and the options you go for so I think that probably covers all of the the main fees so hopefully it illustrates that remortgaging can actually be really really cheap, the arrangement fees can be added to the loan there are fee-free brokers and the valuation is often free, legal fees normally minimal and bear in mind that if you are remortgaging it probably means that your scheme is coming to an end which means that the alternative is that you move, probably, onto a much higher standard variable rate where you're paying significantly too much interest, so remortgaging is normally the right option and it can be very cheap but again your broker will kind of weigh up the overall cost to pick the right scheme for you. It's quite conceivable you will pay nothing on a remortgage isn't it? If you have a relatively modest mortgage that's it's very possible but again we'll check if it's worthwhile and any questions let us know. If you did have any kind of experiences yourself for remortgaging where you found that actually it was very expensive or if actually you agree that it can be very very cheap and it didn't really cost you anything feel free to leave feedback in the comments we'll always try and get back to you and hopefully we'll see you next time.

Thanks a lot!