Costs and Fees - Remortgage, Secured, Buy To Let

As with most financial services there are often fees involved with a remortgage, which you will need to consider:

1. Valuation and legal fees

When you remortgage you will usually have to pay out £100-£450 for a property valuation for your new lender, and conveyancing fees for making the transfer.

Some lenders often offer to pay for such fees, however the interest rate can be higher on this kind of deal, so in the long term the deal may not be that much better that the one you already have.

2. Set-up/arrangement fees

Set up and arrangements fees are also frequently charged and can be anything from £100-£1500. Again your lender may offer special offers and deals regarding these fees, but again this has to be considered as a whole when looking at the rate and deal offered. It may be cheaper in the long run, to pay valuation, solicitors and set up fees to obtain a lower interest rate.

3. Early Redemption Penalties

Redemption penalties are often incorporated into the terms and conditions of your original mortgage. Lenders want to discourage their customers from switching to another product, so they put in such penalties. Normally redemption penalties are % of the outstanding loan amount, and it is extremely important to calculate these before you decide to switch.

During the remortgaging process, you will need to contact your existing mortgage lender to find out exactly how much it will cost to clear your current mortgage. Ensure that all penalties and fees are included. Also be prepared for your existing lender to offer to change your current rate or terms, in an attempt to retain you as a customer. This may save on fees and penalties, and thus be a good option.

If you have an Interest-only mortgage, you will still owe the entire amount you originally borrowed, because you have been paying back just the interest. With a repayment mortgage (also known as a capital and interest mortgage), you will owe less than you borrowed, as you have been paying both the interest and the original capital that you borrowed. You may find however, that you still owe a significant amount, as your lender dictates how your payments are distributed between the interest and the capital. In the earlier years of your loan, when your debt is largest, nearly all your monthly payments goes to paying off the interest element of your loan, leaving only a small contribution towards the original debt. However, as time passes and more of the capital is paid off, the interest bill decreases, and more of your payment is allocated to paying off the capital.

Back to Remortgages

Would you like to know more?

The Basics  |  Flexible Remortgages  |  Cash Back Remortgages  |  Tracker Remortgages
Variable Rate Remortgages  |  Capped Rate Remortgages  |  Fixed Rate Remortgages  |  Discount Remortgages
Cheap Remortgages  |  Cost-Fee Remortgages  |  Remortgaging Tips

Useful Financial Links

Please find below some links that you may find useful from JST Financial. These links are to external sites and will open in a new window.

	Consumer Direct from The Office of Fair Trading carries extensive Loans information, covering everything from Unsecured Loans to Right to Buy Mortgages.
	MoneyMadeClear (The Financial Services Authority) offers a great, free to use Loans Calculator.
	Trading Standards offer advice on taking out a loan and what your rights are.

If you know of any other links that you believe may be of use to our visitors, please contact us.