In our blog series on remortgaging we’ve touched on the fact that there are costs involved in remortgaging. In this blog entry we will be explaining what these are all about.
There may be costs associated with leaving your current deal and for getting your new deal. We will always take these into consideration when working out whether you could save money by remortgaging and furthermore whether remortgaging is the right choice for you.
Note. Not all fees will be applicable to you. We will explain which are in detail to you before we do anything.
Costs for leaving your current deal:
- Early repayment charge. This is the penalty which is applied if you repay your mortgage or pay more than you are allowed during the tie in period (typically the length of time you are on an initial deal e.g. fixed for 2 years). You are being penalised for breaking the deal early and the lender is using this to recoup some of the interest it is losing. The early repayment charge is usually a % of the outstanding mortgage debt. If you do not want to pay the fee upfront then there is the option of adding it to the loan but be aware that you will then be paying interest on it. Paying the charge at all can be avoided by waiting until the end of your mortgage deal to complete on it although there is nothing stopping you starting the process before them (around 3 months before)!
- Exit fee. This is payable to your current lender and covers the closing down costs, deed handling, fees etc. Not all lenders charge this.
Costs for getting your new deal:
- Mortgage fees.
- Arrangement fee – you are paying the lender for setting up your new mortgage. It can be paid upfront or added to the loan.
- Booking fee – some lenders will charge these to secure the deal and this has to be paid upfront.
- Valuation fee. This is a fee charged to the value of your property. Most remortgage packages give you this for free.
- Conveyancing fee. These can also be known as legal fees. Many remortgages include a free legal package to cover this.
- Broker fee. This is the fee you pay us to research the best deal for you and make the process as stress free as possible. In our case this is £200* payable on application.
*As the Mortgage Exchange is an Independent Mortgage Broker you have a choice on how we are paid for our services this is either A) by a set fee of £200 and we also receive commission from the lender, or B) you can chose to pay us a fee equivalent to 0.5% of total borrowing and we do not receive any commission . Over 99% of our clients take option A.
Remember this is just an overview of the general costs involved. They will not all apply to you – it depends on the deal you are on and the deal you are moving to. Again, we will help you with this.