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 and Survey Fees: The lender will want to know that the value of your home prior to offering a mortgage. This is to ensure there is enough security in the property to cover the loan. A valuation will be required in this case and these are carried out by a surveyor. A surveyor will give you a value for the property in the current market and will confirm the condition of the property ensuring it is a suitable state for a remortgage.
They will charge a fee for the valuation, and the fees can vary depending on how much your home is worth and how detailed the valuation report it. Sometimes a lender will offer a free valuation, but if you want a more in depth report you might have to cover some of the cost of this yourself. A basic valuation is usually all that is required however.
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 99 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.
Conveyancing Costs: Conveyancing is a process to deal with the legal issues of property lending, and to ensure that land registry is dealt with. Sometimes the lender will offer free solicitor fees if they have a dedicated solicitor. But if there is additional legal work to be undertaken on your particular application, or if the lender does not have their own solicitor appointed you may still have to pay these fees.
Adviser Fees: Some people prefer to get financial advice when remortgaging, as they can often obtain ‘broker only’ deals and the adviser can also help with the documentation involved. The only issue here is that the money saved on a better deal will probably be cancelled out by the fees charged for the advice. This totally depends on how much the adviser charges.
Early Repayment Penalties: If you are still within the first few years of a fixed rate mortgage, you may have to pay an early repayment charge. If you are unsure just ask your current lender if there is any charge.
These charges will usually apply to discount rate mortgages also. If your mortgage does not have an exit penalty, you may find that there is still a release fee for releasing your mortgage from the existing lender.
Howard writes for Just Commercial Mortgages the UK’s No1 site for the latest commercial mortgage rates and commercial property finance news.