Features and Benefits

Cost of Remortgaging

Existing Lender

It is essential to establish if you have any early repayment charges with your existing lender. If they do apply it may not be the best decision to remortgage at this time. However it is possible that even if you are currently paying an uncompetitive interest rate it may still be financially beneficial for you to remortgage and incur the early repayment penalty. In such circumstances you should ensure that you fully understand how much the penalties would cost you and compare this with the potential saving you could make by swapping to a more competitive mortgage product.

A hidden cost of remortgaging is the exit fee your existing lender will charge you for closing the mortgage. This is essentially an administration fee for closing the mortgage with them. This is a hot topic currently in the mortgage market as lenders have increased the cost of this fee significantly in recent years without any apparent justification. It is important to factor this cost into any savings you have calculated for remortgaging.

New Lender

As previously stated, remortgaging requires a basic valuation of your property to be carried out and a solicitor to handle the transaction. Many lenders will pay for a basic valuation and for basic legal costs to attract new customers from competing lenders.

Products for remortgages are typically no different from those for purchases and have arrangement fees that are payable to the lender. As in a purchase most lenders permit this to be added to your mortgage amount.

You are less likely to have to pay a higher lending charge as your loan to value should be lower due to any increase in your property value. If however you are raising capital by remortgaging ensure you are not incurring unnecessary charges such as a higher lending charge.

See if you could save money by remortgaging to Alliance & Leicester.
www.alliance-leicester.co.uk

mform - the fastest, easiest way to the right mortgage for you
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Money Saving Advice From the Thrifty Scot
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