The Costs of Remortgaging in the UK: Fees, Charges and Savings Explained

Remortgaging is a common step for many homeowners in the UK, often taken when an existing mortgage deal is ending or when better terms are available. By switching to a new deal, you may be able to reduce your monthly repayments, shorten the length of your loan, or release equity for other purposes.

However, remortgaging is not free. There are several fees and charges that can apply, and these can sometimes be confusing if you have not been through the process before. Understanding what to expect is essential so you can weigh up the costs against the potential benefits.

This guide explains the main costs linked with remortgaging, shows how much you might typically pay in the UK, and explores the ways remortgaging can actually save you money in the long run. It also looks at the main factors that influence the overall cost, so you can plan with confidence and avoid surprises.

Breakdown of Fees and Charges You May Face

When you think about a remortgage, it is important to understand the types of fees you might face. These charges are not always obvious, and many people are surprised when they see how many different fees can be involved. Knowing them in advance means you can prepare, plan your budget, and make better choices when deciding if a remortgage is right for you.

Leaving Your Current Deal

If you end your current mortgage before the agreed period, your lender may charge an early repayment charge. This is often a percentage of the amount you still owe. The charge usually reduces as the deal nears its end. For example, on a mortgage of £200,000, a 5 per cent charge could cost £10,000 while a 3 per cent charge might be £6,000. Because of how high these fees can be, it is always worth checking the terms of your current agreement before moving to a new one.

A lender may also charge a deeds release fee or exit fee. This covers the work of closing your account and sending property title deeds to your solicitor. These fees can be a few hundred pounds, and while they may not seem large compared to an early repayment charge, they are still a cost that adds to the total bill.

Setting Up a New Remortgage

You may pay an arrangement fee, also called a product or booking fee. This covers the cost of setting up your new mortgage. It can range from nothing up to several thousand pounds. Lenders sometimes let you add this fee to your mortgage balance, but if you do this, you will pay interest on it for the life of the loan. It is usually better to pay upfront if you can afford to.

Your new lender may require a valuation of your property. The mortgage valuation fee is often around a few hundred pounds, but the exact figure can depend on the lender and the size of your home. The valuation is there to make sure that the property is worth the amount you are borrowing against it.

Legal or conveyancing fees cover the solicitor’s work to change the mortgage on your title deeds and handle the legal paperwork. This can include checking the property title, confirming the new lender’s rights, and dealing with the transfer of money. Costs for this service can vary, but expect several hundred pounds.

Broker Advice Fees

If you use a mortgage broker to help you with remortgage services, you could face a fee. Some brokers charge nothing while others charge up to about one per cent of the mortgage amount. On a large mortgage, this can be quite a high figure. In return, a broker may help you find a better deal, save you time, and guide you through the process.

Using a qualified adviser may help you avoid mistakes and access suitable offers, but this service can add to the cost.

How Much Does Remortgaging Typically Cost in the UK?

The total amount you pay to remortgage can vary a lot. For some people, it may only cost a few hundred pounds, especially if they are not leaving a deal early and their new lender offers free legal work or a free valuation. For others, especially those with early repayment charges or higher fees, it may run into thousands.

Typical overall costs often range between £500 and £2,000 depending on your circumstances, the size of your mortgage, and whether you have to leave your current deal early. This figure includes smaller costs such as valuation and legal fees, as well as larger items like arrangement fees. If you are paying an early repayment charge, the total can be much higher.

In some cases, when many different fees apply, the cost can be well over £5,000 or even more. This is especially true for larger mortgages or when the early repayment charge is at the higher end. It is worth noting that while remortgaging is not free, the savings from a lower interest rate can still outweigh the cost if you plan carefully.

To put this into perspective, if your current mortgage is £200,000 and your new rate reduces your monthly payment by £150, you could save £1,800 in the first year alone. Even if the fees are around £2,000, you would have balanced the cost within just over a year. If the new deal lasts for five years, the total saving could be close to £7,000 once fees are taken into account. This shows why many homeowners see remortgaging as a worthwhile move.

How Remortgaging Can Lead to Savings

Remortgaging can save you money when done at the right time and with a good deal. If you move to a lower interest rate, your monthly repayments could go down. Even after paying fees, the savings can add up over time. For many households, this is the main reason to remortgage.

For example, reducing your mortgage rate by just half a per cent could save hundreds of pounds a year, depending on the size of your loan. On a large mortgage, the difference may be even greater. Over the course of several years, these savings can add up to many thousands, which can make a big difference to your finances. These savings can be used to overpay the mortgage and reduce the loan balance faster, or they can free up money for other household costs.

Some deals include free valuations or legal work, which may reduce upfront costs. However, these deals may come with slightly higher interest rates. This means you should always look at the full picture, including both the fees and the rate itself. Sometimes it is better to pay a little more upfront if the interest rate is much lower.

Staying with the same lender may allow you to avoid legal and valuation fees altogether by switching to a new product. This is sometimes called a product transfer. While this can be easier and faster, it is still important to check if better rates are available from other lenders. A small amount of effort spent comparing deals could save you thousands over the life of the loan.

In some cases, paying a higher product fee can still be worth it if the overall interest rate is much lower. On a large mortgage, the amount you save on interest may far outweigh the product fee. It is always best to use a calculator or work with an adviser to see how the numbers balance over the long term. Planning carefully in this way makes sure the deal works not just in the short term but also for many years ahead.

Factors That Influence the Overall Cost

Several factors affect how much it costs to remortgage. Understanding these can help you make better decisions and avoid surprises. Costs are not the same for everyone, and your situation plays a big role in the final figure.

Timing Within Your Deal

If you remortgage before your current deal ends, you may face an early repayment charge. Avoiding this by remortgaging near the end of your deal can save you a lot. Starting your search a few months before your deal ends can help you switch smoothly without extra charges or being moved onto a higher standard variable rate.

Choice of Lender and Deal Type

Different lenders charge different fees for the same service. Some may offer fee-free deals but with slightly higher interest rates. Others may charge high arrangement fees that could be balanced out by a much lower rate. Always compare both the rate and the fees carefully.

Use of Remortgage Services

If you use remortgage services such as brokers or solicitors, fees may vary. Broker fees can range from zero to a percentage of the mortgage, while solicitor fees can be several hundred pounds. These services can help you find better remortgage options and avoid hidden costs, but they add to the total expense.