How much does it cost to remortgage? Fees and charges explained

The cost of a remortgage depends on two sets of charges: the fees for the new mortgage and the charges for leaving the current one. New-deal costs include arrangement, valuation and legal fees, while leaving costs include any early repayment charge and an exit fee. Many remortgages cost little beyond the arrangement fee.

The exact amounts vary by lender and product, and many lenders offer remortgage deals with free valuation and legal work, or with no arrangement fee but a higher rate. Each mortgage offer and illustration lists the fees for that deal, so the costs can be compared in writing.

An early repayment charge is a fee for paying off a mortgage, or a large part of it, during a fixed, tracker or discounted period. It is usually a percentage of the balance repaid, and it often falls each year of the deal. The charge and how it is worked out are set out in the current mortgage offer.

Remortgaging after the deal ends avoids the charge. Many lenders let borrowers secure a new deal several months before the end date, so the switch can be timed to avoid it. Paying the charge to switch early only makes sense if the saving on the new deal outweighs it. The early repayment charge calculator estimates the charge from the balance and the rate in the offer.

Most lenders charge a fee to close the mortgage account and release their legal charge on the property, often called an exit, discharge or deeds release fee. It is usually a fixed amount set out in the original offer, and it is payable whether the mortgage is repaid early or at the end of a deal.

Exit fees are separate from early repayment charges and are generally much smaller. The current lender can confirm the amount on a redemption statement, which also shows the exact balance to be repaid.

An arrangement fee, sometimes called a product fee, is the lender's charge for the new deal. It can be a flat amount or a percentage of the loan, and it can often be paid up front or added to the mortgage. Adding it to the loan means interest is charged on it over the term, which raises the total cost.

Some lenders also charge a booking or reservation fee when the application is made, which may not be refundable if the remortgage does not go ahead. Deals with no arrangement fee often carry a higher rate, so a lower rate with a fee can cost more in total than a higher rate with none.

The new lender needs a valuation to confirm the property value and set the loan-to-value, and a solicitor or conveyancer to pay off the old mortgage and register the new charge. Many remortgage deals include both for free, using the lender's chosen valuer and solicitor, while others charge for one or both.

Borrowing more, changing ownership or having a leasehold or unusual property can add to the legal work and cost. A product transfer with the same lender usually needs neither a valuation nor a solicitor.

Some mortgage brokers charge a fee for arranging a remortgage, which can be a flat amount or a percentage of the loan, and some are paid only by the lender. A broker must explain how they are paid, and how much, before an application goes ahead, so the fee can be weighed against the time and choice they offer.

Brokers who arrange remortgages can be compared by rating, reviews and region on the remortgage brokers page, which also explains how broker fees work.

The simplest test is to add up all the costs of switching, including fees on the new deal and charges for leaving the old one, and set them against the interest saved over the new deal period. If the saving is larger, switching costs less overall. If not, waiting or a product transfer may cost less.

Lenders' mortgage illustrations show the total amount payable and an annual percentage rate of charge, which include fees, and they are a fair way to compare offers on the same loan and term. A remortgage calculator can show the saving from a new rate after the product fee.