Mortgage fees: What you’re paying for
Many fees and charges that come with a mortgage can be unexpected. As they mount up, so does the cost of your mortgage. So what is it you’re paying for exactly? Here’s a list of some of the fees you could expect to pay if you’re moving to a new house, remortgaging or buying a new home for the first-time.
Booking fee – Possibly the first fee you’re faced with paying is the booking fee, which is charged by some lenders when you’re applying for a mortgage. It can generally cost between £99 and £250.
Valuation fee – To find out how much your property is worth in addition to any repairs that may need done, a survey is carried out. The cost of doing this survey is covered by the valuation fee and can cost anywhere between being given free by your mortgage lender going up to around £1,500.
Arrangement fee – The cost of setting up or ‘arranging’ a loan is called the arrangement fee. Lenders can add this cost to your mortgage and, depending on the lender you have, it could cost up to around £2,000. As such, it’s wise to shop around and compare the arrangement fees of different lenders.
Higher lending charge – This is charged by some but not all lenders and it’s only charged when 90% or more of the property’s value is borrowed. It’s there as protection for the lender in case you default on the mortgage repayments.
Early repayment fees – When you have a discount mortgage or a fixed-rate mortgage and want to opt out of your agreement early, you’ll normally be charged an early repayment fee. Depending on your mortgage deal and loan amount this could run into thousands of pounds.
Legal fees – This is the cost for all the work legal professionals such as your solicitor do for you. It covers things like stamp duty, search fees as well as the conveyancing of a property. Solicitors can charge a fixed fee or else a percentage of the mortgage.
Exit fee – Your lender can charge you a fee when you finish paying your mortgage if you remortgage with them or switch to another lender. The cost of this is usually around £50-£200.
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