How Much Does It Cost to Remortgage?

Overview of Remortgage Costs

The costs of remortgaging fall into several categories. Not all of them will apply to every remortgage — it depends on the deal you choose and your circumstances. Here is a summary:

• Arrangement fee (product fee): £0–£2,000+
• Booking fee: £0–£250
• Valuation fee: £0–£1,500 (often free)
• Legal fees: £0–£1,500 (often free)
• Early repayment charge: 1%–5% of outstanding balance (if applicable)
• Exit fee (deeds release fee): £0–£300
• Broker fee: £0–£1,000+

At the low end, a remortgage with a fee-free deal, free valuation, and free legal work could cost you very little — perhaps just the exit fee from your current lender. At the higher end, if you are paying an arrangement fee, your own legal costs, and an early repayment charge, the total could run into several thousand pounds.

The key is to factor all of these costs into your calculation to determine whether remortgaging will genuinely save you money.

Arrangement Fees and Booking Fees

Arrangement fee (also called a product fee or completion fee): This is the fee the lender charges for setting up your new mortgage. It typically ranges from £0 to £2,000 or more, though some specialist products carry even higher fees.

Lenders often offer the same or similar products at different price points — a lower rate with a higher fee, or a higher rate with no fee. Which option is better depends on your mortgage balance and the length of the deal.

For example, on a £200,000 mortgage with a two-year fix:

• Option A: 3.99% rate with a £999 arrangement fee
• Option B: 4.29% rate with no fee

The 0.3% rate difference saves approximately £600 per year in interest, or £1,200 over two years. Subtract the £999 fee, and Option A saves you around £200 more than Option B. But on a smaller mortgage, Option B might be the better choice.

You can usually add the arrangement fee to your mortgage balance (so you do not pay it upfront), but be aware that you will then pay interest on it for the duration of your mortgage.

Booking fee: Some lenders charge a separate non-refundable booking fee of £50–£250 to reserve your chosen product. This is payable upfront and is not typically refunded if the remortgage does not proceed.

Valuation and Legal Fees

Valuation fee: The lender needs to value your property to confirm it is adequate security for the mortgage. Valuation fees vary based on property value:

• Properties up to £250,000: £150–£300
• Properties £250,000–£500,000: £250–£500
• Properties over £500,000: £400–£1,500+

However, many remortgage deals include a free valuation, meaning the lender covers this cost. Some lenders use automated desktop valuations, which are free and almost instant. It is worth seeking out deals that include a free valuation, particularly if your property value is high.

Legal fees: As discussed in our conveyancing guide, legal fees for a remortgage typically range from £500 to £1,500 including disbursements. Again, many remortgage deals include free legal work, with the lender appointing and paying a panel solicitor to handle the conveyancing.

When both the valuation and legal work are free, it significantly reduces the upfront cost of remortgaging and can make it financially worthwhile even for smaller savings on the interest rate.

Early Repayment Charges and Exit Fees

Early repayment charges (ERCs): If you leave your current mortgage deal before its agreed end date, you may face an early repayment charge. ERCs are typically expressed as a percentage of the outstanding balance and usually decrease over time.

For example, on a five-year fix, the ERC might be:

• Year 1: 5%
• Year 2: 4%
• Year 3: 3%
• Year 4: 2%
• Year 5: 1%

On a £200,000 mortgage, a 3% ERC would be £6,000 — a substantial amount that would need to be offset by significant savings on the new rate.

ERCs do not apply once your deal period has ended and you have moved onto the SVR. This is one of the reasons why most people wait for their deal to expire before remortgaging.

Exit fee (deeds release fee): Some lenders charge a small fee — typically £50 to £300 — when you pay off your mortgage and they release the title deeds. This applies whether you are remortgaging to a new lender or paying off the mortgage entirely. Not all lenders charge this fee, and there has been some regulatory pressure to reduce or eliminate it.

Broker Fees

If you use a mortgage broker to help you find and secure your remortgage, they may charge a fee for their services. Broker fees vary widely:

• Fee-free brokers: Some brokers do not charge you a fee, instead earning commission from the lender when your mortgage completes. The advantage is no direct cost to you, though the commission model means they may be incentivised to recommend lenders that pay higher commissions.
• Fixed-fee brokers: Some charge a fixed fee, typically between £300 and £1,000, for their advice and service. The fee may be payable in stages — some upfront and the remainder on completion.
• Percentage-fee brokers: A small number of brokers charge a percentage of the mortgage amount, though this is less common for standard remortgages.

Whether a broker fee is worth paying depends on the value they add. A good broker can save you far more than their fee by finding the most suitable deal, handling the application efficiently, and navigating any complications. For straightforward remortgages, a fee-free broker may be perfectly adequate. For complex cases, paying for specialist advice can be a wise investment.

Calculating Whether Remortgaging Saves You Money

To determine whether remortgaging is financially worthwhile, you need to compare the total cost of your current situation with the total cost of the new deal, including all fees. Here is a simplified calculation:

Step 1: Calculate the cost of staying on your current rate

If you are moving onto the SVR, calculate the total interest you would pay over the period of the new deal. For example, if you are comparing a two-year fix against staying on the SVR for two years, calculate the total cost of two years on the SVR.

Step 2: Calculate the cost of the new deal

Add up the total interest payments over the deal period, plus all fees (arrangement fee, valuation fee, legal fees, broker fee, exit fee, and any ERC).

Step 3: Compare the two figures

If the total cost of the new deal (including fees) is lower than the cost of staying on your current rate, remortgaging makes financial sense.

For example:

• Cost of 2 years on SVR at 7%: £33,864 in total payments
• Cost of 2-year fix at 4.5% plus £999 fee: £26,766 in total payments
• Saving: approximately £7,098 over two years

Even after deducting any fees, the saving in this example is substantial. A mortgage broker or online comparison tool can help you run these numbers for your specific situation.