2nd June 2023
Does it Cost to Remortgage?
Remortgaging is a process of switching from an existing mortgage to a new one, usually with a different lender or product. It is a common practice in the UK, where homeowners aim to save money on their mortgage payments or access better terms and conditions. However, many people wonder does it cost to remortgage and whether it is worth the effort. In this article, we will explore the costs of remortgaging and explain the factors to consider when deciding whether to remortgage or not.
Introduction to Remortgaging
Remortgaging is a financial decision that requires careful consideration and planning. The main reason why people remortgage is to save money on their mortgage payments. This can be achieved by switching to a mortgage with a lower interest rate or a better deal, such as a fixed-rate mortgage or a tracker mortgage. Another reason for remortgaging is to release equity from a property, which can be used for home improvements, debt consolidation, or other purposes.
However, before deciding to remortgage, be sure to consider the costs involved. Remortgaging may involve fees and charges, such as arrangement fees, valuation fees, legal fees, and exit fees. In addition, switching to a new mortgage may affect your credit score, and you may need to pay early repayment charges if you are still within a fixed term or a discount period. Therefore, it is crucial to weigh the costs and benefits of remortgaging and seek professional advice if necessary.
Does it cost to remortgage?
Remortgaging involves various costs and fees, which can add up to a significant amount. Some of the common costs of remortgaging include:
- Arrangement fees: Many lenders charge an arrangement fee for setting up a new mortgage. The fee can range from a few hundred pounds to several thousand pounds, depending on the lender and the size of the mortgage. Some lenders may offer mortgages with no arrangement fees, but the interest rates may be higher.
- Valuation fees: Most lenders require a valuation of the property to assess its current value and determine the amount of the mortgage. Valuation fees can range from a few hundred pounds to over a thousand pounds, depending on the type of valuation and the lender.
- Legal fees: Remortgaging also involves legal work, such as conveyancing and property searches. Legal fees can range from a few hundred pounds to several thousand pounds, depending on the complexity of the case and the solicitor's fees.
- Exit fees: If you are still within a fixed term or a discount period, you may need to pay an exit fee to your existing lender. Exit fees can range from a few hundred pounds to several thousand pounds, depending on the lender and the terms of your mortgage.
- Other costs: Other costs of remortgaging may include broker fees, mortgage indemnity fees, and stamp duty land tax (SDLT), depending on the circumstances.
So before you finalise your ideas about remortgaging, make sure that you fully understand the associated costs and fees. This will give you a good idea of how much everything costs and whether or not it's a good move for you.
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Factors to Consider When Remortgaging
When considering remortgaging, it is essential to weigh the costs and benefits and assess whether it is worth the effort. Some of the factors to consider when remortgaging include:
- Interest rates: One of the main reasons for remortgaging is to switch to a mortgage with a lower interest rate. However, it is important to consider the overall cost of the mortgage, including any fees and charges, and not just the interest rate. You should also consider whether the interest rate is fixed or variable and whether it suits your financial circumstances.
- Terms and conditions: Another important factor to consider when remortgaging is the terms and conditions of the mortgage. For example, you should consider the length of the mortgage term, the repayment method, and any penalties for early repayment or missed payments. You should also consider any features of the mortgage, such as offset accounts, cashback offers, or loyalty bonuses, that may be relevant to your financial goals and preferences.
- Equity release: If you are remortgaging to release equity from your property, you should consider the amount of equity you wish to release, the interest rate, and the repayment terms. Equity release can be a useful way to access cash for home improvements, debt consolidation, or other purposes, but it can also affect the value of your property and the inheritance you leave to your heirs.
- Credit score: Remortgaging may affect your credit score, as it involves a new credit application and a credit check. Therefore, you should check your credit report and credit score before applying for a new mortgage and make sure that your finances are in order. You should also avoid making multiple mortgage applications within a short period, as this can signal financial instability to lenders and harm your credit score.
- Professional advice: Finally, it is important to seek professional advice when considering remortgaging. A mortgage broker or a financial adviser can help you navigate the complex mortgage market and find the best deal for your circumstances. They can also provide you with a comprehensive assessment of the costs and benefits of remortgaging, as well as the risks and opportunities involved.
Is Remortgaging Right for You?
Remortgaging can be a useful way to save money on your mortgage payments or access better terms and conditions. However, it is important to consider the costs and benefits of remortgaging and seek professional advice if necessary. Remortgaging may involve fees and charges, such as arrangement fees, valuation fees, legal fees, and exit fees, as well as early repayment charges and credit score implications. Therefore, you should assess your financial goals, preferences, and circumstances carefully and weigh the options before making a decision.
If you're looking for advice about remortgaging and would like to learn more about does it cost to remortgage, get in touch with our team at WIS Mortgages for more information.
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As a mortgage is secured against your home/property, it may be
repossessed if you do not keep up with the mortgage repayments.