Keep An Eye On These 5 Fees When Remortgaging, Don’t Let Them Spiral Out Of Control
A remortgage will allow you to put your mortgage onto a lower interest rate to save some money on monthly outgoings, or if you require a further advance in order to do home improvements.
But many people forget that there may be fees involved with a remortgage, meaning that you may not save as much money as you may have initially thought. Yes, the interest rate may be lower but you do need to take into account what the end cost will be with all fees added on top. So what fees do you need to consider?
Valuation Fee: The valuation is one of the first steps in any remortgage. The lender needs to confirm the market value of your home in order to ensure they aren’t lending too much and that your remortgage fits their ‘loan to value’ criteria. In addition, they want to make sure that your home is in satisfactory condition and that there are no structural problems with it.
However, surveyors have to be paid for undertaking a valuation. Fees for a survey can range from £200 to over £1,000 depending on the size and value of your home – even if a surveyor works for the lender involved. Whilst many lenders will meet the cost of a basic survey as part of the remortgage process, others will insist that you meet this cost. And, if you want to commission a more detailed survey of your home, this could easily cost several hundred pounds.
Broker Fees: An increasing number of homeowners use mortgage brokers to assist them with a remortgage deal. Brokers are useful because they have a wide knowledge of the market and are able to shop around on your behalf for the best deals from all the lenders in the UK. Whilst this can be very useful and whilst some brokers take their fee from the mortgage provider, others will present you, the homeowner, with some quite excessive fees for their services.
Admin Fees to Current Lender: A common charge that arises during the remortgage process comes not from the new lender but actually from your existing mortgage provider. It is not unusual for your existing lender to charge administration or ‘closing’ fees to cover the admin costs of repaying your mortgage and closing your account. Your existing lender will be able to tell you what, if any, fees are applicable.
Arrangement/Booking Fee: Most remortgage fixed or tracker rate deals come with some sort of booking or application fee. Often these can be several hundred pounds or, in some cases, a percentage of the mortgage amount.
A ‘booking fee’ is similar, one fixed fee for administration, paid up-front. You should always bear in mind that when you pay a booking fee, it is largely none refundable. If you submit your remortgage application and subsequently decide not to take the application further, you will probably not receive any refund of this fee.
Legal Fees: Even though you are not moving home, a remortgage involves a certain amount of legal work. So, a conveyancer has to be employed to deal with the Land Registry and to obtain local searches. The solicitor can be appointed either by the lender or by you.
Many lenders will agree to pay for the legal work involved (if you use one of their appointed solicitors). However, you will sometimes have to use your own solicitor who will charge you for the work. In addition, if there is any additional legal work to be carried out (for example if you are transferring ownership of the property from joint to single names) there may be extra legal fees.
Timothy Frodsham writes for JustRemortgages.com one of the UK’s
top sites for the latest remortgage rates and best remortgage deals.