Remortgaging can be a great way to potentially reduce your monthly mortgage payments, but make sure you weigh up the overall costs rather than just the tempting headline rate. Not all of them apply to all remortgages, and you can discount some of them completely by using a fee-free broker to find your remortgage deal:
Early exit fee
Some mortgage terms include an early repayment charge (which can be 2%–5% of your outstanding loan) if you change lenders while you’re still locked in to your mortgage deal. That’s why the most common time to remortgage is when your fixed or introductory tracker or discounted rate comes to an end. Ask your solicitor if they can help you avoid this charge, for example by delaying your completion date, so your remortgage only starts when your first mortgage term has ended.
Some mortgage brokers will charge a fee for their services – it will usually cost you £200-£500. (But not Habito – we’re free!)
Your lender will need to value your property to check the difference in value from when you first took out your mortgage. This is so they can lend you the right amount of money and make sure it’s secured against the real value of your property. Many remortgage packages will include a free valuation, but this depends entirely on the lender and the mortgage you’re getting.
Whether you’re buying, selling or remortgaging a property, you’ll need to appoint a conveyancer or solicitor: essentially a lawyer who specialises in property law. You’ll have to pay for these services, but the good news is that most remortgages include a free legal package, so often – as long as there are no extenuating circumstances – you won’t have to pay anything. Be sure to ask your broker about any fees, as they vary from lender to lender.