Remortgaging is often seen as a way to save money, but it's important to be aware of the costs involved upfront. While some deals may seem cheap on the surface, various fees can add up. Understanding these costs helps you compare deals accurately and make an informed decision. Here’s a clear breakdown of the main costs you might encounter when remortgaging.
Valuation Fees
Your new lender will need to assess the value of your property to ensure it's a suitable asset for the loan. This involves a valuation fee for a professional to carry out the assessment. The cost of this can vary depending on the value of your home, but many lenders will offer a free valuation as part of a remortgage deal. It's always a good idea to check if this is included.
Legal Fees
When you remortgage to a new lender, legal work is required to transfer the mortgage from your old provider to the new one. This will involve a conveyancer or solicitor, and their services will incur a fee. Again, some lenders offer a "free legal package" as an incentive, but this may come with certain conditions or limitations.
Arrangement Fees
Also known as a product fee, this is a charge from the lender for setting up your new mortgage deal. This can be a significant cost, often ranging from a few hundred pounds to over a thousand. You usually have two options for paying this fee:
- Upfront: You pay the fee as part of the application process.
- Added to the mortgage: You can add the fee to your total mortgage loan. While this means you don't have to pay it upfront, it's important to remember that you will pay interest on this fee over the entire term of your mortgage.
Broker Fees
When you use a mortgage broker, such as us at IMC Mortgage Brokers, a fee will be charged for providing a professional service. This fee compensates us for the time and expertise we dedicate to your case, which includes:
- Searching the market: We have access to a wide range of deals, allowing us to find a product that is specifically tailored to your needs.
- Expert advice: We will assess all the costs and benefits of a remortgage to ensure it is the right financial decision for you.
- Handling the paperwork: We can take on the administrative burden of your application, making the process smoother and less stressful for you.
While our service involves a fee, we believe it is a worthwhile investment. Our goal is to find a product that saves you more money in the long-term than the cost of our service. Any fees for our service will always be clearly confirmed with you before we proceed with any work. This ensures complete transparency and that you are comfortable with the costs from the very beginning.
Are "fee-free" mortgages a good idea?
Many lenders advertise deals with no arrangement, valuation, or legal fees. While these can seem very attractive, it's important to look at the whole picture. Sometimes, a lender might offset these "free" benefits by charging a higher interest rate from the outset.
A "fee-free" remortgage may be beneficial if the money you save on fees outweighs the higher interest rate. However, a deal with a slightly higher upfront fee but a much lower interest rate could save you more money over the long run. The best way to compare these options is to look at the total cost of the deal, including all fees and the interest you'll pay.
Getting Professional Guidance
Navigating the costs and complex deals of remortgaging can be confusing. That's where a mortgage broker can provide invaluable help. We will consider all the fees, charges, and interest rates to find the most suitable and cost-effective product for your individual circumstances, ensuring you avoid any unpleasant surprises.
Book your free initial consultation to discuss your remortgaging options and let us help you find a deal that’s right for you.