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  • Writer's pictureRicky Gandhi

How Much Does Remortgaging Cost in the UK?

Remortgaging is the process of switching from your current mortgage deal to a new one. It can be a good way to save money on your monthly mortgage payments or to get a longer-term or a different type of mortgage.


Remortgage

However, remortgaging can also come with some costs. Here's a breakdown of the most common remortgaging fees:

  • Arrangement fee: This is a fee charged by your new lender to process your remortgage application. The amount of the arrangement fee will vary depending on the lender, but it's typically between £1,000 and £2,000.

  • Early repayment charge: If you're still within the term of your current mortgage deal, you may be charged an early repayment charge (ERC) if you remortgage. The amount of the ERC will depend on the terms of your current deal, but it can be up to 5% of the outstanding balance of your mortgage.

  • Valuation fee: Your new lender will need to value your property to assess its current worth. The valuation fee will typically cost between £200 and £500.

  • Legal fees: You'll need to pay legal fees to arrange your remortgage. The amount of the legal fees will vary depending on the complexity of your case, but it's typically between £500 and £1,000.

  • Broker fees: If you use a mortgage broker to help you remortgage, you may be charged a fee. The amount of the broker fee will vary depending on the broker, but it's typically between £200 and £1,000.

In addition to these fees, you may also need to pay stamp duty if the value of your property has increased since you bought it.


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How much will I save by remortgaging?

The amount of money you save by remortgaging will depend on a number of factors, including:

  • The interest rate on your current mortgage

  • The interest rate on the new mortgage

  • The term of the new mortgage

  • The amount of your outstanding mortgage balance

  • The early repayment charge (if any)

If you're currently on a high-interest mortgage, you could save a significant amount of money by remortgaging to a lower-interest deal. However, if you're on a low-interest mortgage, the savings you make from remortgaging may be less significant.

It's important to compare the overall cost of remortgaging to the savings you'll make before you make a decision.

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Is remortgaging right for me?

Remortgaging can be a good idea if you're able to save money on your monthly mortgage payments. However, it's important to weigh up the costs of remortgaging against the savings you'll make.

If you're on a high-interest mortgage, you're likely to save money by remortgaging. However, if you're on a low-interest mortgage, the savings you make may be less significant.

You should also consider the early repayment charge (ERC) if you're still within the term of your current mortgage. If the ERC is high, it may outweigh the savings you'll make from remortgaging.

If you're unsure whether remortgaging is right for you, it's a good idea to speak to a mortgage broker. They can help you compare different deals and find the best option for you.

How to remortgage?

The process of remortgaging is relatively simple. Here are the steps involved:

  1. Get quotes from different lenders. You can use a mortgage comparison website to get quotes from a number of lenders at once.

  2. Choose a lender and apply for a remortgage. When you apply for a remortgage, you'll need to provide the lender with details of your income, outgoings, and your property.

  3. The lender will assess your application and decide whether to approve it. If your application is approved, you'll be sent a remortgage offer.

  4. Once you've received the remortgage offer, you need to decide whether to accept it. If you do, you'll need to sign the offer and return it to the lender.

  5. The lender will then arrange for the transfer of your mortgage. This process can take a few weeks.

Once your mortgage has been transferred, you'll start making monthly payments to your new lender.

Conclusion

Remortgaging can be a good way to save money on your monthly mortgage payments. However, it's important to weigh up the costs of remortgaging against the savings you'll make.


Book a free call with mortgage adviser

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