For many people, the biggest potential cost of remortgage comes from redemption fees associated with ending their existing mortgage contract. These will be largest when an early redemption penalty is incurred, but there may be some sort of fairly low redemption fee even if the mortgage is redeemed outside the early redemption penalty period.

Early redemption penalties are likely to be biggest when you are still within an introductory offer period and the rate of interest that you are paying is fixed, discounted or capped. However, some lenders employ an overhand, where the early redemption penalties extend beyond this period. Depending on the policy of the lender and the size of the loan, redemption penalties can cost several thousand of pounds, which would obviously need to be factored into your calculations of whether it is worthwhile remortgages. Quite often it is not worthwhile, but you should not rule out remortgaging within the penalty period if you are stuck on a particularly high rate or have access to a particularly good deal.

In addition to any redemption fees, there are a number of other costs attached to remortgaging your property:

Firstly, the new lender will wish to value the property to ensure it is worth sufficient money to loan you a new mortgage. They will not rely on the valuation of the previous lender and the cost of this is normally the same as for a normal mortgage. However, the good news is that you will not require another survey for your own peace of mind, as you are likely to with a house purchase.

Secondly, there is some conveyancing work to be done as part of the remortgage process. Again, the cost of this is not usually as much as with a house purchase, but your solicitor will have to perform new local searches, as the old ones are only valid for 3 months from the date on which they were carried out.

Many lenders will offer some form of remortgage package, which entitle you to a refund of your valuation and legal fees on completion of the remortgage, provided you use their panel of professionals. If you are considering such a deal, make sure that the package is genuinely free of charge and not offered at the expense of a lower rate of interest. Because the cost of conveyancing and valuations are not linearly related to the value of the property, this type of remortgage package tends to be more worthwhile with a lower value property, as the costs represent a bigger proportion of the property value.

Don't forget that when you remortgage, you will be moving back to the start of a repayment curve. This means that interest will once again form big part of your monthly repayments and a smaller proportion of your payment is working towards reducing the outstanding capital. Furthermore, most people who remortgage generally extend the term beyond the end of their old mortgage. This means that you will be paying interest for longer and may face a higher long-term interest bill, even if you appear to be making short-term savings.