Mortgage Fees

[Sleepyquest]

Just remortgaged and managed to get a better interest rate wooo!

But I'm shocked at the £999 product fee. Will we have to pay this every single time we remortgage??

Probably. Im starting to wonder if its better to just stay on a variable rate?

I guess we have agreed to it this time and next time I'll be more cautious!

We always use a mortgage broker who looks at products with either no or very low fees. We usually switch to a new product at the end of the fixed term so it would be completely ludicrous to pay a grand every couple of years.

There are plenty calculators out there to help you work it all out. For example the product fee may give you a lower interest rate so you need to work out over the period you are fixing over if you are paying less than a product with no fees despite including the product fee.

You have to do the maths - look how much better the deal is / how much you save over the fixed term, and then take off the amount of the fee. At that point you can see if it is worth it for you.

If you are saving £250 a month on the previous deal, then, after 4 months you've recouped the fee.
If you are saving £10 a month on the deal, then it will take you 100 months to recoup the fee.

I've not paid that much, but then it is many years since I've remortgaged, but, proportionately, yes, it is normal to pay a fee, which you factor in to how good the deal is.

If you stay with the same mortgage lender, it's unlikely there'd be a fee. Ours doesn't charge anyway.

How long is the fixed product for?

BackforGood's explanation is spot on.

@Singlenotsingle Most lenders offer a variety of products, some will have fees and some will not. The same applies to getting a new product with your existing lender, they'll offer you various options for you to choose from.

It’s six and half a dozen really. A fee free mortgage usually equals a higher interest rate. You need to look at the overall costs for those with and without to work out which deal is actually the best.

You need to factor this in so I will save 200 monthly over 3 years thats 7200 but I pay 999 to do so. Still saving 6200. If you save 20 monthly so 720 its not worth it. All depends how much your saving monthly

High fees are often used so they can charge a lower rate and appear at the top of best buy tables.

As others have said, you have to do the maths for your mortgage amount and also compare the difference between fee and fee free mortgages to see if it is worth it to you.

The smaller your mortgage is, the less worth it is to pay a fee and sometimes it just isn't worth paying it at all, especially if it's only a 2 year fix, so it is worth considering whether you should go for a longer term fix, or a lifetime product. I realised that it is unlikely to be worth it for us to remortgage regularly and pay fees, so we went for a lifetime tracker and will almost certainly never have to remortgage again. Also has added advantage of not being tied in and can make unlimited overpayments, not that it is doing at the moment, as the interest rate is lower than our savings account so we just put extra money in there instead.