Remortgage Costs: How Much Does It Cost to Remortgage? UK

Cost: 1% - 5% of your outstanding mortgage

ERCs (early repayment charges) are essentially the cost to remortgage early.

You’ll only need to pay ERCs if you choose to remortgage before your introductory rate period ends. You may also incur ERCs if you overpay more than the limit specified in your mortgage contract or if you repay your loan in full earlier than the agreed date.

Be sure to find out when your early repayment period ends before switching to a new deal. Failing to do so could significantly reduce - or even eliminate - the potential savings from remortgaging. If you do choose to pay the ERC, you may have the option to pay it upfront or add the cost to your new mortgage. However, opting for the latter means you’ll also pay interest on this amount.

ERCs typically range from 1% - 5% of your outstanding mortgage balance. For example, if you have £100,000 remaining on your loan, an ERC could cost you £1,000. In many cases - especially with high street lenders like NatWest, HSBC, or Lloyds - the longer you have left on your introductory deal, the higher your ERC will be. Some lenders tier down the percentage of the penalty each year as your deal progresses.

It’s recommended that you start arranging your remortgage up to 6 months before the end of your tie in period. This allows you to secure a new rate early and reduces the risk of moving onto your lender’s more expensive SVR (standard variable rate).

Cost: £999 – £1,999

A product fee is charged by lenders for arranging credit on your behalf. While it may seem unusual to consider this an administrative fee, it’s actually linked to the lender’s interest rates.

Lenders typically offer 2 types of products: one with a product fee - often around £999 or £1,999, though this can vary - and one without a product fee. The product without a fee usually comes with a higher interest rate. Your broker can help determine which option is most cost-effective for you. In fact, more often than not, if you have a large loan, choosing a product with a fee can be cheaper overall due to the lower interest rate over time.

Before deciding whether to remortgage your property, it’s important to review the APR (annual percentage rates) from each lender to get a clear understanding of the total costs involved in remortgaging. High fees may actually be more beneficial for those taking out large loans, as they typically come with lower interest rates over the long term. Conversely, low fees are ideal for those with smaller loans, as they help minimise upfront costs. Don’t worry – your mortgage adviser will go through this with you. 

Many lenders will allow you to add the product fee to your loan, but keep in mind that you’ll have to pay interest on it. 

Cost: around £300, although the lender may cover it free of charge

When you’re remortgaging a property, it’s advisable to hire a property conveyancing solicitor.

Their responsibilities include:

• Performing ID checks, as well as Land Registry and leasehold checks
• Obtaining redemption statements from your existing lender
• Conducting property searches
• Issuing a formal offer after the property valuation
• Reviewing your contract thoroughly before gathering signatures from all parties involved

Many remortgages include a free legal package that covers these services. However, in this case, the solicitor will be appointed by the lender and you won’t have a say in who they choose. Alternatively, you may choose to pay for your own solicitor, giving you the freedom to shop around. Some lenders even offer a cashback incentive if you decide to use your own solicitor.

Fortunately, John Charcol is able to refer you to an experienced conveyancer with the help of our partner ConveyNext. Get a conveyancing quote here.

Your property conveyancing solicitor will also be responsible for paying off your old mortgage upon completion and transferring any remaining funds to you.

Cost: free, or a fixed fee or % of your loan amount

If you use a mortgage broker to remortgage, you may be charged a fee. At John Charcol, we don’t charge a fee until you’ve received a mortgage offer. Our advisers will also ensure you’re fully aware of any fees before doing business with you, so you’ll know exactly what to expect well in advance.

It’s best to use a mortgage broker when applying for a mortgage because, not only will we find you the most competitive deal for your situation, but we’ll also:

• Guide you through the process
• Calculate your affordability
• Handle the paperwork
• Submit and manage your mortgage application
• Liaise with the lender
• Arrange insurance and protection
• And much more

You’ll also find that you may need to use a mortgage broker if you’re applying for a niche product or have a complex situation, as many specialist lenders don’t work directly with borrowers - they require intermediaries to manage the process.

At John Charcol, our job is to save you money and make the mortgage process as easy and stress-free as possible. We’re with you every step of the journey, from your first call with us, through to completion and beyond.

To find out more about our fees and how we can help, contact us on 0330 433 2927.

Cost: around £300 – £400, although it may be offered free of charge

A valuation fee is often the only survey cost you may need to pay. In most cases, you won’t be required to cover the cost of a homebuyer’s report or structural survey, as these aren’t always necessary. Through either a desk-based assessment or a physical inspection, your lender will confirm that the property is worth the amount you’ve requested to borrow.

A valuation is essential for the lender’s security. If you fail to repay the loan for any reason, the lender can repossess the property and recover their investment. This fee is typically paid when you first apply for a mortgage and is often bundled with booking and arrangement fees.

You can also carry out some initial research yourself by using online valuation tools, which are based on Land Registry data, and by comparing similar properties in your area. Keep in mind that your available interest rates may change if the property’s valuation places you in a different LTV band.