Costs and Fees When Remortgaging: A Complete Guide 2025

Remortgaging is one of the most effective ways to reduce your monthly outgoings, but the process itself comes with costs that can eat into your savings if you are not careful. The good news is that with the right approach, you can significantly reduce what you pay to switch. In this article, we share our top tips for keeping remortgaging costs to a minimum in 2025.

At Option Finance, we have helped thousands of UK homeowners remortgage to better deals. One of the most common questions we hear is “how can I reduce the cost of switching?” These tips are drawn from our experience of working with lenders across the whole market.

Time your switch to avoid early repayment charges

The single most expensive mistake you can make when remortgaging is triggering an early repayment charge (ERC) on your existing mortgage. ERCs apply when you leave a mortgage deal before the initial rate period ends, and they can cost thousands of pounds.

Typical ERCs range from 1% to 5% of the outstanding balance. On a £250,000 mortgage, a 3% ERC would cost you £7,500 — a sum that could take years to recoup through lower monthly payments.

To avoid ERCs:

• Check your mortgage offer — your original offer document details the ERC schedule, including when charges reduce and when they expire entirely.
• Start looking early — most mortgage offers are valid for 3-6 months, so you can secure a new deal well before your current one expires without triggering any penalties.
• Mark the date — set a reminder 6 months before your deal expires so you have plenty of time to explore options.

There are rare situations where paying an ERC can be worthwhile — for example, if interest rates have dropped dramatically and the savings over a new 5-year term outweigh the charge. Our remortgage calculator can help you run the numbers.

Choose deals with free valuations and free legal work

Many remortgage deals come with free standard valuations and free conveyancing. These incentives are offered by lenders to attract new business and can save you between £500 and £1,500 combined.

When comparing deals, always check whether the offer includes:

• Free valuation — the lender covers the cost of valuing your property (normally £150-£1,500 depending on property value).
• Free legals — the lender appoints and pays for a solicitor to handle the legal transfer.

A deal with a slightly higher interest rate but free valuation and legals can work out cheaper overall than a lower rate with both fees payable. This is one of the reasons we always recommend looking at the total cost of a deal rather than the rate alone.

If you are moving home rather than remortgaging, the cost structure is different and typically higher, which is another reason many homeowners choose to remortgage instead.

Compare the total cost, not just the interest rate

It is natural to be drawn to the lowest interest rate, but the cheapest rate is not always the cheapest deal. Two mortgage products can have identical rates yet very different total costs once fees are factored in.

Here is a practical comparison:

Deal A: 4.25% fixed for 5 years, £999 arrangement fee, free valuation, free legals

Deal B: 4.15% fixed for 5 years, £1,995 arrangement fee, free valuation, free legals

On a £200,000 mortgage over 25 years:

• Deal A monthly payment: approximately £1,082, total cost over 5 years: £65,919 (including fee)
• Deal B monthly payment: approximately £1,071, total cost over 5 years: £66,255 (including fee)

Despite the lower rate, Deal B costs £336 more over the deal period because of the higher arrangement fee. Our mortgage calculator makes it easy to compare scenarios like this.

At Option Finance, we always present the total cost comparison so you can see exactly which deal saves you the most money.

Consider adding fees to the loan carefully

Most lenders allow you to add the arrangement fee to your mortgage balance rather than paying it upfront. While this avoids an immediate outlay, it means you pay interest on the fee for the life of the mortgage.

Adding a £1,500 fee to a 25-year mortgage at 4.5% would cost you roughly £2,500 in total — nearly double the original fee. Over a 30-year term, the cost would be even higher.

If you have the savings available, paying the fee upfront is almost always the more economical choice. However, if cash is tight, adding the fee to the loan is still better than staying on an expensive standard variable rate (SVR). The interest you pay on the fee will likely be far less than the interest you save by switching.

Our affordability calculator can help you work out what you can comfortably afford and whether paying fees upfront is a realistic option for your budget.

Improve your loan-to-value ratio

Your loan-to-value (LTV) ratio — the percentage of your property’s value that you are borrowing — has a significant impact on the rates and fees available to you. Lower LTV ratios unlock better deals because the lender faces less risk.

The key LTV thresholds to aim for are:

• 75% LTV — this is often where the best rates become available
• 60% LTV — rates can improve further at this level
• 80% or 85% LTV — still competitive, but you will pay slightly more than at 75%

If you are close to a lower LTV band, it may be worth making a lump sum payment before remortgaging to push you into the next bracket. For example, if your property is worth £300,000 and your mortgage balance is £228,000 (76% LTV), paying off just £3,000 would bring you to 75% LTV and could unlock significantly better rates.

Use our overpayment calculator to see how additional payments could reduce your balance and improve your LTV position.

Negotiate with your current lender

Before committing to a remortgage with a new lender, it is worth speaking to your existing lender about a product transfer. A product transfer allows you to switch to a new rate with the same lender, often with minimal paperwork and no valuation or legal costs.

While product transfer rates are not always the most competitive, the absence of fees can make them an attractive option. There is also no risk of your application being declined, which can be a concern if your circumstances have changed since your original mortgage.

That said, product transfers are limited to deals offered by your current lender. A whole-of-market broker like Option Finance can compare your lender’s product transfer rates against remortgage deals from over 90 other lenders to ensure you are getting the best possible outcome.

If you have adverse credit issues that have developed since your original mortgage, a product transfer may be the more straightforward route, as your current lender already holds your account history.

Bundle your protection review

When remortgaging, it is a good opportunity to review your insurance and protection policies. Your new lender will require buildings insurance, and you may also want to consider:

• Life insurance
• Critical illness cover
• Income protection
• Mortgage payment protection insurance (MPPI)

Reviewing these alongside your remortgage can sometimes yield savings through bundled deals or by identifying gaps in your existing cover. At Option Finance, we offer a complementary protection review as part of our remortgage service.

If you are a first-time buyer who took out minimal protection when you first purchased, remortgaging is a sensible time to reassess your needs.

Use a whole-of-market broker

Perhaps the most impactful tip is to use a whole-of-market mortgage broker rather than approaching lenders directly. Brokers have access to the full range of deals on the market, including exclusive rates that are not available to direct applicants.

A good broker will:

• Compare deals from dozens of lenders
• Calculate the total cost of each option, including all fees
• Identify deals with free valuations and free legals
• Handle the application and paperwork on your behalf
• Chase lenders to keep things moving
• Advise on whether a product transfer is a better option

The Financial Conduct Authority (FCA) regulates mortgage brokers in the UK, which means you are protected by strict standards of conduct. Brokers must act in your best interest and recommend products that are suitable for your circumstances.

At Option Finance, we are authorised and regulated by the FCA and have access to the whole of the market. Whether you are looking at a straightforward residential remortgage or something more complex like a buy-to-let remortgage or a self-employed mortgage, we can help you find the most cost-effective solution.

Keep your paperwork organised

A smooth remortgage application can save you both time and money. Delays caused by missing documents can result in rate locks expiring, meaning you may need to reapply for a different (potentially more expensive) deal.

Before starting your remortgage application, gather:

• Proof of identity — passport or driving licence
• Proof of address — utility bills or bank statements from the last 3 months
• Income evidence — recent payslips (usually 3 months) and your latest P60. If you are self-employed, you will need 2-3 years of accounts or SA302 tax returns.
• Bank statements — typically the last 3 months, showing income credits and regular outgoings
• Current mortgage statement — showing your balance, rate, and any ERCs
• Property details — EPC certificate and details of any alterations or extensions

Having everything ready from the outset helps your broker submit a complete application, which speeds up the process and reduces the risk of costly delays.

Watch out for the standard variable rate trap

One of the most expensive mistakes homeowners make is allowing their mortgage to roll onto the lender’s SVR without taking action. When your initial deal period ends — whether it is a 2-year fix, a 5-year fix, or a tracker — you automatically move onto the SVR unless you arrange a new deal.

SVRs are typically 2-4% higher than the best available rates. On a £200,000 mortgage, this could mean paying an additional £200-£400 per month compared to switching to a competitive fixed rate. Over 12 months on the SVR, that adds up to £2,400-£4,800 of unnecessary cost.

The solution is simple: start exploring your options 3-6 months before your deal expires. At Option Finance, we proactively monitor our clients’ deal expiry dates and get in touch when it is time to review. You can also use our remortgage calculator to see how your current payment compares to what is available on the market.

If you are already on the SVR, do not panic — but do act quickly. There are no early repayment charges to worry about on an SVR, which means you are free to switch at any time. The sooner you move, the sooner you start saving.

Consider the bigger picture

Finally, think beyond the immediate costs and consider your longer-term financial goals. Remortgaging is not just about finding the cheapest rate today — it is about structuring your mortgage in a way that supports your broader plans.

Ask yourself:

• Do you want to pay off your mortgage faster? A shorter term or the ability to make overpayments could be more valuable than a marginally lower rate. Our repayment calculator can show you the impact of different term lengths.
• Are you planning to move in the next few years? A shorter fixed rate with lower ERCs might be more suitable than a 5-year fix.
• Do you need to raise additional funds? Remortgaging can be a cost-effective way to release equity for home improvements or other purposes, but you need to factor in the cost of borrowing more.
• Could you benefit from a flexible mortgage? Features like payment holidays, offset facilities, or unlimited overpayments can provide valuable flexibility, even if the rate is slightly higher.

At Option Finance, we take the time to understand your goals and recommend a remortgage deal that balances cost savings with your wider financial needs.

Ready to save on your remortgage?

Remortgaging does not have to be expensive. By timing your switch carefully, choosing deals with free valuations and legals, comparing total costs rather than just rates, and working with a whole-of-market broker, you can keep costs to an absolute minimum while maximising your savings.

If you are thinking about remortgaging, get in touch with our team at Option Finance for a free, no-obligation review of your options. We will compare the whole market, calculate the true cost of switching, and help you find the deal that saves you the most. There is no pressure and no obligation — just honest, expert advice.