Re-mortgaging

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If you decide to remortgage your home it is important to remember that although you may not be physically moving your remortgage will incur the same costs as if you were, even if you remain with the same lender. This means that you will have to pay legal costs to change your homeloan.

However, some lenders will cover this cost on some deals. Remortgaging can be a good thing if you are on a variable rate mortgage and think interest rates are about to rise. It is a good way to raise funds if you have owned your property for a few years as it could be worth more than your outstanding debt. You should also be aware that you may have to pay an early repayment charge to release yourself from your old one.

Some lenders impose early repayment charges if you repay your loan early or switch to another lender during a set period. This can be the case if you have taken a discounted or fixed rate loan where you can be tied in during the special deal or even years after it has finished.

Once you have made your decision to remortgage you should write to your existing lender and ask for a written redemption statement. This will outline the early repayment charges or fees to be charged for redeeming your mortgage. As well as showing you the exact outstanding balance.

There are costs involved and these include:

• Administration and arrangement fees for the new mortgage.
• Fixed rate mortgages will usually accrue fees of between £150 - £300.
• Mortgage valuation fee tends to be between £130 - £300 depending on your lender and the valuation of the property.
• Solicitors fees - some lenders do offer free legal work.
• Land registry and local search fees.
• Higher Lending Charge if the amount you are borrowing is above a certain percentage depending upon the lender you may need to pay a one-off Higher Lending Charge on the new mortgage.

If you redeem the existing mortgage within a certain period of time you may have to pay a charge for repaying the mortgage early.