Remortgage Costs UK: All Fees Explained

What does it cost to remortgage?

Remortgaging involves several potential costs, though many of them can be reduced or eliminated entirely with the right deal. The total cost of remortgaging typically ranges from £0 to £3,000, depending on the lender, the deal you choose, and whether you need a property valuation and legal representation.

Understanding each cost component helps you calculate whether remortgaging will genuinely save you money compared to staying on your current deal or accepting a product transfer from your existing lender.

Breakdown of remortgage fees

Arrangement fee (product fee): This is the fee charged by the new lender for setting up the mortgage. It typically ranges from £0 to £2,000. Deals with higher arrangement fees often come with lower interest rates, so you need to compare the total cost over the deal period. You can usually add this fee to the loan balance, but you will then pay interest on it for the life of the mortgage.

Valuation fee: The new lender needs to assess the property's value. This costs £200–£500 depending on the property value, but many remortgage deals include a free valuation. Some lenders use automated desktop valuations rather than physical inspections, which speeds up the process and reduces costs.

• Legal and conveyancing fees: £300–£1,000 for the solicitor to handle the legal transfer. Many remortgage deals include free legal work as an incentive
• Early repayment charge (ERC): If you are leaving your current deal before it ends, you may face an ERC of 1–5% of the outstanding balance. On a £200,000 mortgage, a 3% ERC would be £6,000
• Exit fee (deeds release fee): A small charge from your current lender for closing the mortgage, typically £50–£300
• Broker fee: Some mortgage brokers charge a fee of £300–£1,000 for their service. Others are paid entirely by commission from the lender. Ask your broker upfront how they are paid

How to reduce remortgage costs

The most effective way to reduce costs is to choose a remortgage deal that includes free valuation and free legal work. Many lenders offer these as standard, particularly for straightforward remortgages. While the interest rate may be marginally higher than a deal without these perks, the fee savings of £500–£1,500 often more than compensate over a 2–5-year deal.

To avoid early repayment charges, time your remortgage to coincide with the end of your current fixed or tracker deal. Start the process 3–6 months before your deal ends so the new mortgage is ready to start seamlessly. If you switch before your deal ends, calculate whether the rate saving outweighs the ERC.

Should you add fees to the mortgage?

Most lenders allow you to add the arrangement fee to the loan balance rather than paying it upfront. This avoids an immediate cash outlay but means you pay interest on the fee for the remaining mortgage term. On a £999 fee added to a 25-year mortgage at 5%, you would pay an additional £750 in interest over the full term.

Adding fees to the loan makes sense if you need to conserve cash or if you plan to remortgage again in 2–5 years (meaning you will only pay interest on the fee for a short period). If you have the cash available and plan to stay on the mortgage for many years, paying upfront is usually cheaper overall.

When the costs outweigh the savings

Remortgaging does not always save money. If the interest rate saving is small (less than 0.2–0.3%) and the costs are significant, a product transfer with your existing lender may be the better option. Product transfers are typically fee-free and do not require a valuation or legal work.

Remortgaging is unlikely to be worthwhile if your remaining mortgage balance is small (under £50,000), you are close to the end of your mortgage term, the available rates are not significantly better than what your current lender offers, or you have early repayment charges that exceed the potential saving.

Cashback remortgage deals

Some lenders offer cashback on completion, typically £250–£1,000, which can help offset the costs of remortgaging. Cashback deals are particularly attractive when combined with free valuation and free legals, as they can effectively make the remortgage cost-free or even put money back in your pocket.

However, cashback deals sometimes come with slightly higher interest rates. Always compare the total cost over the deal period, including the cashback, to determine whether a cashback deal is genuinely better value than a lower-rate deal without cashback.

Get expert help with your remortgage

A mortgage broker will calculate the total cost of remortgaging, including all fees and charges, and compare this against product transfer options and staying on your current rate. They can identify deals with free valuations, free legals, and cashback to minimise your outgoings and maximise your savings.

Nesto matches you with FCA-regulated remortgage brokers who provide a full cost comparison. Find a remortgage broker through Nesto and make sure your remortgage genuinely saves you money.