What costs are involved with re-mortgaging?

feesh

Our mortgage runs out in December and we will need to re-mortgage to avoid the lender's SVR.

I just wondered what costs we can expect, I really have no idea as I have never done this before. I am really worried, because we have just borrowed £12k of our parents to have some major repairs done on the house and we therefore have NO savings.

herbiesjp

Firstly ask your current lender what they can offer - you will not have legal fees or valuation fees - but will normally have an arrangement fee associated with the rate you choose.

If you then look at other lenders and find cheaper rates, you could potentially have legal fees to pay, valuations to pay, and again arrangement fees. Some lenders will offer free legal fees and valuations to re-mortgage customers. So you need to shop around for the best deal that suits you.

Arrangement fees can be added to the mortgage amount, but if you do so, don't forget you are paying interest on that amount as well, and some lenders will charge you standard variable rate on the fee added as opposed to the same rate you have chosen for the mortgage

feesh

Thanks herbie that's really helpful. So if there are legal fees to pay, will we need a solicitor then? We just had a letter to say our original solicitors has been closed down for some sort of malpractice issue and our files have been transferred to somewhere else.

Also do they come round and literally do a survey to re-value your home? We have done lots of work to it, but nothing is selling on our street - what if they decided it's worth a lot less than it was when we bought it two years ago? It was about an 80% mortgage at the time.

herbiesjp

If you choose a deal without the "freebies" then yes you will need to find a solicitor to do the work for you.

Yes - they will also send round a surveyor to give an accurate an up to date value of your property. In the current climate, the value of your property may well have gone down even with the work that you carried out on it, hence the reason why no properties are selling

grogdog

are you planning to pay your parents back by icreasing your mortgage? if so you probably will have a problem with ltv. if not you will get an existing deal with existing lender with no upfront fees for you to pay, you will ony need a solicitor if you move to a new lender.

MarkyMarkD

If you remortgage, you would have to disclose the £12k of borrowing from your parents, which isn't going to help your affordability or anything else.

I would strongly suggest asking your existing lender for a product switch, in the present environment, as then you won't be credit scored, won't be asked to disclose income or commitments, and won't need a valuation.

grogdog

why would he have to disclose loan from parents? its not going to show up on any credit search.

manikm

What costs are involved with re-mortgaging?

About 600 - 999 on a product fee with normally free valuation and legals.

So, no more than £1000 and you can add it on to the mortgage.

feesh

Thanks for the advice.

I wasn't planning on disclosing the £12k - it's not something the mortgage companies need to know about! We won't have any trouble paying it off with bonuses next year.

We both have excellent credit history and ratings - I got my score from Experian last month and it was 978.

Our salaries are good and plenty enough to cover the mortgage.

My only real concern is the amount of fees we're going to have to find by December, as we have literally cleared out our entire savings this month to pay the final bills for the work on the house. We normally save £400 pcm, but are giving this to our parents at the moment to pay them back for the £12k loan.

It was essential work, including a re-wire, and a damp proof course which was unfortunately a condition of the mortgage originally.

Nice as the house looks now we have re-decorated, I doubt we added much in the way of value and I imagine it's worth at least 10% less than it was when we bought it, judging by the fact 2 of our neighbours can't seem to sell theirs.

MarkyMarkD

grogdog wrote: »

why would he have to disclose loan from parents? its not going to show up on any credit search.

Because not doing so is mortgage fraud which is illegal. :rolleyes:

feesh wrote: »

We normally save £400 pcm, but are giving this to our parents at the moment to pay them back for the £12k loan.

Hmm, hard to see why it ought to be disclosed then, eh? Obviously makes no difference to your ability to repay your mortgage. :rolleyes: