Remortgaging is something most people do to save themselves some money, but does it cost to remortgage? And if so, how much? Well, there are a number of factors when it comes to remortgaging, so it’s important that you know the costs so that you can work out if it’s worth it for you.
Early repayment charge
This is a charge applied if you repay your mortgage during a product’s end date. Basically, it is a charge for if you decide to break the deal early. Your lender will want to recoup some of the interest it is losing, so that is why they charge this fee. The early repayment charge is usually a percentage of the outstanding mortgage debt, so it could cost you up to 5%. You can usually choose whether to pay the lender you’re leaving upfront, or increase the mortgage amount you’re applying for from a new lender to cover the charge.
Deeds release fee
A ‘deeds release fee’ is basically just an ‘admin charge,’ to pay for your current lender to forward on your title deeds to your solicitor. You might be asked to pay this upfront when you first set the mortgage up. Otherwise, it will be when you’re leaving your current lender. You’re not paying interest on it, so the figure won’t change, which means it makes sense to opt to pay at the end. You’re looking at £0-£300, however not all lenders charge them.
So, if you’re getting a new deal then there are other fees to pay:
Mortgage fees
You’re likely to have at least one mortgage fee, but it could be two, the booking fee and the mortgage arrangement fee. The Arrangement fee is the key part of the true cost of a mortgage, along with the interest rate.
Valuation fee
Most remortgage packages give you the valuation fee for free; however, if this isn’t the case, then you can expect to pay around £300-£400, which is what the lenders need for their security.
Conveyancing fee
This goes to your solicitor for the legal work that is required to remove the original lender’s interest from the property and register the new lender. However, most remortgages include a free legal package but if not then it’s usually around £300.
Broker fee
If you’re using a broker, then you may have to pay a fee, however it can often be worthwhile to make sure you’re on the right product, not to mention the saving you might make. This is particularly important for CIS subcontractors – where approaching lenders direct, even non-specialist brokers, can mean you don’t end up on the right deal. This is an easy trap for CIS subbys to fall into, with many brokers and lenders calculating affordability based on net profit, rather than gross CIS income.
Your new mortgage repayments
To work out your exact monthly payment for your new mortgage, you need to know the rate you’ll be applying for. Remember that your first payment’s likely to be higher than your normal monthly payment as you pay interest in the month you get the mortgage, as well as for the upcoming month.
Get Mortgage Advice
At CIS Mortgage Advice, we help subbys find the right remortgage deal, working with lenders that base their affordability calculation on your gross CIS income rather than net profit, meaning you could borrow up to 5 x more on your mortgage.
For advice and support with all aspects of obtaining a mortgage please call me on 08000 306705 or drop me an email to david@cismortgage.co.uk.
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE