Abbey estimated that the average upfront cost of remortgaging to a new deal can be around £1100, including booking and valuation fees. Assuming a borrower were to remortgage 12 times during the course of their mortgage, they would be paying £13,596 in fees in their lifetime. However, brokers can help borrowers to reduce up-front costs with mortgage deals that don't charge booking fees or come with free legal and valuation fees.
Ricky Okey, managing director of Abbey for Intermediaries, said: "Remortgaging can save a borrower a significant amount of money in monthly mortgage payments, but it is important to consider all the fees and charges involved, not just the headline mortgage rate. The average cost of remortgaging could be £1100, so a new rate would have to be more than 0.8 per cent cheaper over two years in order to balance out that cost. Brokers should therefore consider offering their clients mortgage deals with no up-front fees to reduce costs."
Abbey breaks down the average cost of arranging a new mortgage deal (source: Moneyfacts):
- Booking fee on new product - £448
- Valuation fee - £285
- Legal fees - £400
- Total - £1133
Key remortgage facts:
- Almost half (48 per cent) of all homeowners have switched lenders at some point, with 52 per cent of these people doing so in the past five years.
- For those people who haven't yet switched lenders, just under two thirds (65 per cent) say they would consider doing so.
- Most people remortgage to get a better mortgage rate and reduce monthly payments (66 per cent).
- Remortgaging to release equity is also popular, with one fifth (19 per cent) having done this. Of these people:
- Just over one third (36 per cent) raised money for home improvements.
- 16 per cent consolidated debts.
