The Ultimate Remortgaging Dictionary

Are you planning to remortgage? It can be difficult to navigate through the terminology. We've decrypted the jargon into a simple, straightforward glossary.

When the time comes to meet with your mortgage adviser, you’ll be equipped with everything you need to make an informed decision. Here are the terms you need to know to ace your application.

Administration Fee

Otherwise known as a deeds release fee, this transaction is paid to your current lender to release your property’s title deeds to your solicitor. Either you were given the option to pay this when you first set up your mortgage, or it offered once your existing mortgage ends. The latter is preferable, as you will not need to pay interest on it.

Arrangement Fee

An arrangement fee is paid to your lender for them to set up your mortgage. Typically, you’ll have the choice to pay upfront or add it to the mortgage, though this will ultimately cost more as you will pay interest on it. If you are taking out a large mortgage, it’s preferable to secure a flat fee rather than pay on a percentage basis. It can often be worth opting for a product with a higher interest rate in return for a lower fee. The amount you pay is dependent on the individual lender. Be sure to ask your mortgage adviser for more details.

Base Rate

The base rate refers to the percentage the Bank of England charges other banks and lenders when they borrow money. It currently sits at 0.10%, though it is subject to fluctuation. It has an effect on the interest rates that other lenders charge for mortgages, loans and credit products.

Early Repayment Fee

Both fixed and variable-rate mortgages often come with tie-ins that last for the duration of your term, and are usually offered in exchange for favourite interest rates. By partially or fully paying off your mortgage before the agreed time, early repayment charges will be applied to offset the loss of interest that would have otherwise been incurred.

Essential Repairs

Lenders grant loan approvals based on the condition of your home. After performing a valuation, they may recommend you make some essential repairs to ensure it is in good shape ahead of being placed on the market.

Equity Release

Under an equity release, a lender gives the borrower cash in return for a share in the proceeds of the property sale at a later date. Many lenders opt to use this to borrow money against the value of their home by taking out a mortgage.

Fixed Rate

A fixed rate mortgage offers borrowers an interest rate that remains the same for the duration of their term.

Flexible Rate

Flexible mortgages allow borrowers to vary their monthly repayment schedules without being penalised by the lender – including the ability to opt for a payment holiday whereby you’ll underpay or overpay.

You could save a great deal of money by remortgaging, especially if you’re about to be switched to your lender’s standard variable rate. With this glossary in your back pocket, you’ll have a much greater understanding of the process.