Searching High And Low For The Perfect Mortgage And Can't Find One? Here's A Few Tips To Help You.

When you remortgage, it is imperative that you don't just think about the new lower interest rate, but also include other costs in your budgeting. A new lower interest rate can be very tempting, but there are other fees to take into consideration when you take out a new mortgage deal.

So there are many upsides to remortgaging, your monthly payment may reduce so you feel that your costs are reducing but have you taken into account the total cost of a remortgage? Have you taken into account the upfront fees and expenses and added them to the equation? Whilst your monthly payment may be lower you could find that in some circumstance the upfront cost of remortgaging eat into the overall cost savings. So it is really important before making the decision to remortgage, to make sure you fully understand and take into account these potential fees.

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.

Sometimes the lender will pay the cost of a valuation report, but others will require you to pay it yourself. If the bank has appointed surveyors then the cost is often quite low - around £300 but this all depends on the size and value of your property, and how detailed you want the report to be. A longer more detailed report will cost you more money and often if lenders pay the cost, additional reports will have to be paid by you.

Application Fees: When you are taking out a mortgage, you will usually have to pay an application fee to cover administration costs of processing your application. Even if the interest rate is lower, you will need to check the application fee as this may increase the overall cost of the mortgage as it can be as much as £2000 on some mortgages.

Application fees can be charged up front or on completion of the mortgage, depending on the lender and the rate offered. Up front application fees usually cannot be refunded even if you are refused. You can often add the fees to your mortgage, but just remember that if you do you'll be paying interest on this as well as the actual lending amount.

Solicitors Fees: Remortgage lenders will typically employ their own approved solicitors to undertake the legal work involved in the remortgage process. And, they will often meet the costs of these fees. However, if there is any additional work that needs carrying out - a transfer of title, for example - you are likely to have to pay for this work yourself.

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 Redemption Charges: Certain mortgage such as discounted or fixed rates can carry early redemption charges if you redeem your mortgage within the first few years. Check that this doesn't apply to you otherwise you can end up increasing your mortgage rather than reducing it.

Your current lender may impose an 'early repayment charge' if you are currently benefiting from a fixed or discounted rate with them. And, even if there are no such charges, your lender might levy an administration or 'sealing' fee when you close your mortgage account.


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Timothy Frodsham writes for Just Commercial Mortgages the UK's No.1 site for the latest commercial mortgage rates and commercial property finance news.