Remortgage Costs and Fees: What You'll Actually Pay

Remortgaging sounds like a straightforward swap — out with the old deal, in with the new. In practice, there are several distinct costs to understand before the numbers make sense. Some are mandatory. Some are optional. Some are waived by certain lenders. And some are so large they make the switch not worth doing.

The Full List of Potential Remortgage Costs

Not every remortgage incurs every cost. The fees below are the ones that exist in the market — which ones apply depends on your lender, your current mortgage terms, and the product you're switching to.

Arrangement Fee (Product Fee)

Also called the product fee. This is charged by the new lender for setting up the mortgage deal. It is the most commonly seen fee in remortgage advertising.

Typical range: £0 to £2,000, with £999 and £1,499 being the most common levels from mainstream lenders.

Some products come with no arrangement fee at all — these typically carry a marginally higher interest rate instead. The lower rate, higher fee product is not automatically better. It depends on how large the mortgage is and how long you'll be on the deal.

Worked example — does the fee pay off?

You're remortgaging a £200,000 mortgage on a 2-year fix.

• Product A: 4.15% rate, £999 arrangement fee
• Product B: 4.30% rate, £0 arrangement fee

Monthly payment difference: Product A saves approximately £17/month on interest. Over 24 months, that's £408 saved on interest — but the arrangement fee costs £999. Net result: Product A costs you £591 more over the 2-year period despite the lower rate.

At a higher loan amount — say £350,000 — the same rate difference saves £30/month, or £720 over 2 years. Still less than the £999 fee, but closer.

At £500,000, the interest saving is £710 over 2 years. Still less than the £999 fee.

The point where a £999 arrangement fee breaks even depends on the rate differential, loan size, and term. On large mortgages with long fix periods (5 years), a lower rate with a fee often wins. On smaller mortgages with 2-year fixes, a no-fee product is often cheaper overall.

Early Repayment Charge (ERC)

The ERC is the most financially significant cost you can encounter in a remortgage — and the one most likely to catch people off guard.

If you remortgage before your current fixed rate deal ends, your existing lender will charge an early repayment charge. This compensates the lender for losing a fixed-income product ahead of schedule.

ERCs are typically:

• 1–5% of the outstanding mortgage balance
• Highest in the early years of the deal, reducing year on year

Typical ERC structure on a 5-year fix:

On a £250,000 mortgage in Year 2 of a 5-year fix, a 4% ERC costs £10,000. That would need to be offset by an extraordinarily good new rate to be worthwhile.

ERCs are stated in your original mortgage offer documentation. If you no longer have this, your lender's mortgage statement or online account will show when the penalty-free window opens.

When an ERC might still be worth paying

There are situations where triggering an ERC makes financial sense:

• Rates have dropped significantly and the interest saving over the new deal period outweighs the ERC
• Releasing equity for home improvements or to clear high-interest debt produces a net financial gain
• Relationship breakdown or other life changes force a mortgage restructure

The maths needs to be done explicitly, not assumed. A broker with whole-of-market access can run this comparison properly.

Exit Fee (Deeds Release Fee / Redemption Fee)

Charged by the existing lender when you pay off the mortgage. This covers the administrative cost of releasing the title deeds and discharging their charge on the property.

Typical range: £50 to £300. Some lenders call this a mortgage exit administration fee (MEAF) or account closure fee.

This fee should be listed in your current mortgage terms. It applies whether you're remortgaging to a new lender or paying off the mortgage entirely. It does not apply if you do a product transfer (staying with the same lender).

Booking Fee

A smaller charge applied by some lenders at the point of application to reserve the mortgage product. Typical range: £99 to £299. Often non-refundable if the application doesn't proceed.

Not all lenders charge this separately — some include it within the arrangement fee. When a booking fee and arrangement fee both apply, they're separate charges.

Valuation Fee

The new lender needs to know what the property is worth. The type of valuation required depends on the LTV, property type, and lender policy.

• Automated valuation (AVM): Free. A desktop assessment using Land Registry data and algorithms. Used for low-LTV, standard properties. No surveyor visits.
• Drive-by / kerbside: £0–£150. A surveyor confirms the property exists and looks structurally sound from the exterior.
• Full internal valuation: £150–£500. A surveyor visits internally. Common for properties with unusual characteristics, older properties, or higher LTVs.

Many lenders waive the valuation fee entirely as a remortgage incentive. This is worth checking when comparing products — a slightly less competitive rate with free valuation can come out cheaper.

The fee, when charged, is usually payable upfront regardless of whether the application succeeds.

Legal Fees

Remortgaging involves a legal transfer — the existing lender's charge on the property is removed and the new lender's charge is registered. This requires a solicitor or licensed conveyancer.

Free legal service: The majority of standard remortgage products come with a free legal service — the lender instructs a panel solicitor at no cost to you. This handles the standard legal transfer work and is usually adequate for uncomplicated cases.

Using your own solicitor: £300–£700+ in legal fees. This may be worth considering if:

• The title has complications (covenants, boundary issues, historical defects)
• You want independent advice rather than a lender-appointed firm
• The panel solicitor is known to be slow and you need speed

Using your own solicitor on a case with a free legal offer doesn't save money — it adds cost. It only makes sense if there's a specific reason to need independent legal advice.

Broker Fee

If using a mortgage broker, they may charge you a fee on top of the procuration fee they receive from the lender.

• Fee-free brokers: £0. Common for standard remortgage cases. The broker earns only the lender commission.
• Fee-charging brokers: £300–£1,000+. More common for complex cases — adverse credit, self-employed income, unusual properties — where the broker's specialist work justifies a fee.

See the how mortgage brokers get paid guide for a full explanation of the fee structure, including why fee-free doesn't mean the broker works for nothing.

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The "Free Remortgage" — What It Actually Means

Many lenders advertise a "free remortgage" or "cashback remortgage." These are real offers, not meaningless marketing — but understanding what's included matters.

Free remortgage typically means:

• Free legal service (panel solicitor at lender's cost)
• Free valuation (automated or drive-by)
• No booking fee

What it does not mean:

• No arrangement fee (check separately)
• No ERC on your current deal
• No exit fee to your existing lender
• No broker fee

A "free remortgage" where the arrangement fee is £1,499, the ERC is £4,000, and the broker charges £500 is not free. "Free" refers specifically to the legal and valuation costs.

Cashback remortgages offer a one-time payment on completion — typically £250 to £500. This can offset the legal fee if you've chosen to instruct your own solicitor, or add value on top of a free legal service. Cashback is usually paid by the new lender and forms part of their deal package.

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Understanding Total Cost of Remortgaging

The right way to evaluate a remortgage is total cost comparison over the fixed period, not headline rate alone.

Total cost includes:

• Monthly payments at the offered rate × number of months in the deal
• Plus arrangement fee
• Plus valuation fee (if applicable)
• Plus legal fee (if not free)
• Plus broker fee (if applicable)
• Plus ERC (if remortgaging before current deal ends)
• Less any cashback received

Minus the exit fee from the current lender (this applies either way, so is less relevant to comparisons between new deals, but should be factored into the cost of switching vs staying on SVR).

Worked example — full cost comparison:

You owe £200,000 with 20 years remaining. Current deal ends in 2 months and you're comparing two remortgage options and doing nothing (SVR).

Option A: Lower rate, higher fee

• Rate: 4.10%, 2-year fix
• Arrangement fee: £1,499
• Free legal + free valuation
• No broker fee (fee-free broker)
• Monthly payment: £1,219
• Total over 24 months: £29,256 + £1,499 fee = £30,755

Option B: Higher rate, no fee

• Rate: 4.35%, 2-year fix
• No arrangement fee
• Free legal + free valuation
• No broker fee
• Monthly payment: £1,251
• Total over 24 months: £30,024 + £0 fee = £30,024

Option C: Do nothing (SVR)

• SVR: 7.49% (illustrative lender SVR)
• Monthly payment: £1,576
• Total over 24 months: £37,824

In this example, Option B is cheapest of the two remortgage products. And either remortgage product saves substantially over staying on SVR.

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Costs When Remortgaging to Release Equity

Capital-raising remortgages — where you borrow more than the current outstanding mortgage — carry the same fee structure, but with additional considerations.

Higher LTV bracket: Borrowing more may push you into a higher LTV band, which typically means a worse interest rate tier. If you're currently at 60% LTV and releasing equity moves you to 75% LTV, the rate available is likely to be higher regardless of how well you've managed the mortgage.

Stamp duty: Not applicable to remortgages. You're not buying a property.

Legal complexity: If the equity release is for a significant amount, or if the title has complications, the conveyancing may be more involved. The free legal service is still usually available but may take longer.

Tax: HMRC doesn't tax equity release through a remortgage. The cash drawn down is a loan, not income.

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Costs When the Remortgage Falls Through

If a remortgage application is declined — at underwriting, due to valuation, or for another reason — some costs may already have been incurred.

• Booking fee: Often non-refundable if paid
• Valuation fee (if paid upfront): Generally non-refundable even if the application fails
• Legal fee: If using a panel solicitor (free service), no loss. If using your own solicitor, fees for work already completed may be charged
• Broker fee: Most brokers structure fees as payable on completion, so a declined application usually doesn't trigger the fee — but check this explicitly

The ERC is not triggered by a declined application. You only pay the ERC if the new mortgage completes and your current one is redeemed early.

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Reducing Remortgage Costs

There are legitimate ways to reduce the cost of a remortgage:

Wait for the penalty-free window. If you're 9 months from the end of your current fix, the ERC may reduce significantly over the next few months. The difference between remortgaging 6 months early versus at the end of the deal can be thousands of pounds.

Compare total cost, not rate. Moving from a high-fee product to a no-fee product at a marginally higher rate often saves money, particularly on smaller mortgages and shorter fix periods.

Use the free legal service. Unless there's a specific reason to need your own solicitor, the panel solicitor saves £300–£700 with no practical downside for a standard case.

Check the product transfer first. Your existing lender may offer a competitive deal with no legal fees, no valuation, and no ERC — because you're staying with them. This isn't always the best option, but it's worth checking before committing to a full remortgage with all its associated costs.

Use a whole-of-market broker. The difference in interest rates across the market can amount to far more than any broker fee. A broker who compares the full market — including product transfers — can identify savings that aren't visible from comparison sites alone.

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What to Ask Before Committing

Before proceeding with any remortgage, get answers to these questions in writing:

1. What is the total arrangement fee, and can it be added to the mortgage?
2. Is valuation included at no cost?
3. Is a free legal service available, or are separate solicitor fees payable?
4. What ERC applies to my current mortgage if I complete before [date]?
5. What exit fee does my current lender charge?
6. Is there a booking fee, and is it refundable if the application is unsuccessful?
7. What is the total cost of this deal over the fixed period including all fees?

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Fee Summary Table

This is educational content, not financial advice. Your situation is unique — speak to a qualified mortgage broker before making any decisions.