How much will remortgaging cost?

It can also be called a product fee, or confusingly some lenders might call this a booking fee or application fee. In fact, your lender can conjure up any name for it.

Before you choose a mortgage, always look at the fees. There are two things you need to think about:

• Beware low rates disguising high fees.

  Cunning lenders often use high fees to make their interest rates look more attractive, so they rise up the best buy tables. Some charge fees of £2,000+. Expect to pay an arrangement fee of at least £1,000 to secure an attractive rate.
   

• Is a low or high fee best?

  Whether it's best to go for a high fee/low-rate deal, or a low fee/high-rate deal depends on the size of the loan you need. Generally speaking, higher fees work better for larger loans. Benchmark some top rates (with and without fees) using the MoneySavingExpert Mortgage Best Buys tool, then use our Compare Two Mortgages Calculator to see the effect.

The lender will usually offer you the option to pay the arrangement fee upfront (at the same time you pay any booking fee) or, you can add the fee to the mortgage. The disadvantage of adding the fee to the mortgage is you'll pay interest on it, as well as the mortgage, for the life of the loan. But if you pay the fee upfront, there's a chance you could lose it if anything went wrong with the purchase.

So what should you do? Luckily, there's a trick you can use here to ensure that you don't lose the fee, but also don't pay interest on it.

This is how it works...

If you add the fees onto your mortgage, it protects you from losing any part of the fee paid upfront if your mortgage (or property purchase) doesn’t go ahead for any reason. Don't worry about it affecting your loan-to value band, adding it won't.

Saying that, if you are at the top of a band, particularly if it's 95%, the lender might not allow you to add it. So do check.

To avoid paying interest on the fee, if you can, quickly 'overpay' after the mortgage completes. Lenders usually allow overpayments of 10% of the balance each year without penalty, so you should be fine - but, again, it's best to check so you're safe not sorry!

• How much? £0-£2,500
• When do I pay? Either on mortgage application or add it to the loan
• Who do I pay? Your lender
• Will I always have to pay this fee? No
• Do I need to pay upfront or can I add it to my mortgage? Either

Booking fee

Some lenders charge a mortgage booking fee to secure a fixed-rate, tracker or discount deal - it's sometimes also called an application fee or a reservation fee. It's unlikely you'll be charged more than £100-£200. 

You'll need to pay this fee (if your chosen mortgage has one) as soon as you submit your application. This booking fee's non-refundable, so you won't get it back if the property purchase falls through.

• How much? £100-£200
• When do I pay? On mortgage application
• Who do I pay? Your new lender
• Will I always have to pay this fee? No, not all lenders charge them
• Do I need to pay upfront or can I add it to my mortgage? Pay upfront