The True Costs Of Remortgaging
Finding the right remortgage can be tough. Not only do you want to take advantage of a great interest rate but you may also want to fix your payments. You may also want to borrow additional funds to consolidate debts or undertake some home improvements. And, you may want to benefit from an offset facility or from greater payment flexibility.
Whilst saving money may be your primary concern when remortgaging, it is important that you consider the costs of the remortgage process as well as the savings you may make in terms of your monthly repayments. Sometimes a great deal may have hidden fees which can make it less appealing. If you are thinking of remortgaging, ensure that you check to see whether any of the following five fees will be payable.
Valuation/Survey Fee: When you apply for a remortgage, one of the first things that a lender will do is to instruct a qualified surveyor to undertake a valuation on your home. The surveyor wants to check that there are no structural issues with your home as well as providing a realistic market valuation of your property.
A surveyor will typically charge between GBP250 and GBP1,000 for their services, depending on the complexity of the survey and the anticipated value of your home. Although many lenders will meet the basic valuation cost incurred in the remortgage process, you may have to foot the bill if you want a more detailed valuation or if the surveyor has to make subsequent visits to your home (to check that improvements have been carried out to plan etc).
Booking/Application Fee: Lenders rarely offer something for nothing and so you will often find that a booking or application fee applies to promotional interest deals that they may offer. These fees can range from GBP99 to a percentage of the loan amount, depending on the lender and the deal.
Booking fees are typically payable with your remortgage application and will often be non refundable (if your remortgage application is subsequently declined). Application or arrangement fees can often be added to your new mortgage and are only payable when the remortgage completes.
Solicitors Fees: Remortgage lenders will typically employ their own approved solicitors to undertake the legal work involved in the remortgage process. And, they will often meet the costs of these fees. However, if there is any additional work that needs carrying out a transfer of title, for example you are likely to have to pay for this work yourself.
Broker Fees: Mortgage brokers have access to a wide range of remortgage products and can help manage the paperwork involved in the remortgage process. However, many brokers will charge a fee for their service and this can range from GBP150 to 1 per cent of your mortgage amount. If you are planning to remortgage, make sure you take any broker fee into account when calculating your potential savings.
Early Repayment Charges: Sometimes when you are remortgaging, the fees you will incur will not come from the new lender but from your existing lender. Whilst your new deal may be 'fee free' you should still be careful that you do not end up incurring huge costs.
Your current lender may impose an 'early repayment charge' if you are currently benefiting from a fixed or discounted rate with them. And, even if there are no such charges, your lender might levy an administration or 'sealing' fee when you close your mortgage account.
About the Author:
Howard writes for Just Commercial Mortgages the UK's No1 site for the latest commercial mortgage rates and commercial property finance news.
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