What are the costs of remortgaging?

The main cost lines

A remortgage may carry a lender product fee (often called arrangement fee), legal fees and a property valuation fee. Major Money Matters charges no client broker, advice or arrangement fee for mortgage advice. The client fee is £0. Some lenders waive one or more of those as part of the offer. We map them clearly so the all-in figure is on one page.

Lender product fee

Typically £0 to £1,499. Often the cheapest headline rate carries the highest product fee. We model both the fee-paid and fee-free versions of the same lender to show which actually nets cheaper over your fixed period.

Legal fees

Many remortgage products include free legals, where the lender appoints a panel solicitor to do the legal work at no cost to you. The trade-off is that you do not get to choose the firm. If you want your own solicitor, expect £300 to £600.

Valuation fee

Most residential remortgages use an automated valuation, which costs nothing. Higher loan-to-value (LTV) cases or unusual properties may need a physical survey, £200 to £500.

Our fee

Major Money Matters charges no client broker, advice or arrangement fee for mortgage advice. The client fee is £0. For mortgage business, we are paid commission/procuration fee by the lender, normally when the mortgage completes. The amount is disclosed in the relevant mortgage illustration/ESIS and associated disclosure documentation. Lender product fees, valuation fees, legal fees and other third-party charges are not Major Money Matters fees. Their payment and refund terms are set by the relevant lender or third-party provider and disclosed before you commit.

Worked example, fee-paid versus fee-free on a £200,000 remortgage

The same lender offers two versions of the same product. Version A: 4.20% rate with a £999 product fee. Version B: 4.45% rate with no product fee. Over a 5-year fix on a £200,000 mortgage, version A interest cost is roughly £38,300, version B is roughly £40,500. Version A saves £2,200 in interest, costs £999 in fee, net £1,201 ahead. On a £100,000 loan the same comparison usually flips because the fee absorbs a bigger share of the saving; version B wins. The break-even is roughly £125,000 of borrowing on this fee size. We run the maths for you.

Adding fees to the loan

Most lenders let you add the product fee to your loan. That preserves your savings position but you pay interest on the fee for the life of the loan. On a five-year fix at typical rates, paying the fee up-front is usually slightly cheaper. We run both options on numbers.

What about an ERC?

An ERC (Early Repayment Charge) only applies if you remortgage before your existing rate ends. We time the completion so the ERC does not apply. If you have a clear reason to switch early, we run the maths on whether the rate saving outweighs the ERC. As an illustrative example only, an ERC scale might run 5% in year one, 4% in year two, 3% in year three, 2% in year four, 1% in year five, then zero. On that example, a £200,000 loan in year three would carry an ERC of £6,000, which is a high bar to clear with a rate saving alone. ERC schedules vary considerably between lenders and products, so your own scale may differ.

Common pitfalls we see

Comparing rate to rate without comparing all-in cost. Picking free legals on a complex case that the panel solicitor cannot handle, then having to switch part-way and pay both. Not asking what a broker charges and what it covers (Major Money Matters charges no client broker, advice or arrangement fee for mortgage advice). Choosing the highest-fee lowest-rate product on a small loan and not realising the fee swallows the saving. We avoid all four.