Mortgages are one of the biggest outgoings a person or family will have, but as well as the ongoing payments and interest that needs to be paid, there are upfront costs that need to be considered.
A lot, if not all, of these fees can be different for different mortgage products. Some lenders won't charge certain fees, and others may charge fees that aren't on this list. You should check all fees associated with whichever mortgage deal you are considering, and make sure you know what you will have to pay before signing.
A lot of these fees are also non-refundable, so make sure you know what you can and cannot get back, should the deal fall through before completion.
An arrangement fee is the cost charged to set up and buy the mortgage product. The arrangement fee may come under different names, such as a completion fee or a product fee.
How much will an arrangement fee cost?
Some mortgage products may be offered with no arrangement fee attached, and some may come with quite a hefty charge. However, those which have no arrangement fee may have higher interest rates, or have the fee integrated into the repayments. An arrangement fee can therefore cost anywhere from nothing to thousands of pounds.
Whereas the arrangement fee is paid to set up the mortgage, the booking fee may be charged even before this. It can be charged for the meetings and admin required to set up the mortgage. Usually, this is non-refundable, as it is a charge on the time the lender puts into your mortgage before it is signed for or arranged.
How much will a booking fee cost?
A booking fee is usually cheaper than a general arrangement fee, and will likely be between £100 and £500
A broker fee is the cost charged by the broker that put you in touch with the mortgage lender, or who helped arrange, explain, or advise which mortgage to choose.
How much will a broker fee cost?
A broker fee depends completely on which broker you used. It could be a one off charge reaching into the hundresds of pounds, or by hours spent organising the mortgage deal.
However, the broker may take a commission from the lender for setting up the mortgage deal instead, meaning you will not have to pay the fee. Make sure you know if it will be your responsibility to pay before using a broker.
Building insurance arrangement fee
This is a fee a lender may charge you to set up your own building insurance. Some don't charge it at all, so you need to check first, if you want to shop around and get your own insurance product. The fee pays for the admin arrangement between your lender and the insurer.
What will a building insurance arrangement fee cost?
The price can vary on this, but will not be much compared to some other fees. Typically, it will cost around £30. If you don't want to source your own insurance, you won't have to pay it. It may work out cheaper in the long run to pay the fee and find your own insurance product.
A closure fee is similar to an arrangement fee, but deals with the work needed to close the mortgage and end it. Even if you are not paying the mortgage off early, and the term has naturally come to its end, you may still have to pay this fee.
How much will a closure fee cost?
The closure fee is usually a couple of hundred pounds.
Early repayment fee
Early payments can be a great way to shorten the life of your mortgage; if you have the cash available, you may as well pay off a bit more of the mortgage early, right? Well, unfortunately some lenders will charge you extra to do this. It is entirely dependent on each individual lender, but you should make sure you know what the rules will be for your mortgage before you sign it.
Early repayment fees can be charged on a partial repayment or a full repayment.
How much will an early repayment fee cost?
The early repayment fee is likely to be charged proportionally to the amount that you are paying off early, costing you anything from 1-5% of the repayment. The lender will be missing out on the interest that this amount would have earned them in the longer term, so this helps to offset that loss on their part.
Higher lending charge
The higher lending charge is usually only applicable on mortgages which have a very small deposit. It goes towards paying for the mortgage lender to take out insurance on the mortgage they are lending to you, which comes into play should you be unable to keep up with the repayments.
If the lender ends up repossessing your home and sells it to get their money back, there is a chance they will have to sell the property at a loss. The insurance that the higher lending charge pays for will help them to get some of this loss back.
How much will a higher lending charge cost?
The higher lending charge is proportional to the value that the property is worth. It is usually charged at 1.5% of the property value. A mortgage with a smaller deposit is more likely to have this extra charge, as the lender is less likely to be able to get their full money back on a repossession.
Missed payment charge
Although missing a payment does not mean that the lender will immediately repossess a home, charges may be made if a borrower falls into arrears. This pressures borrowers into paying back on time, and compensates the lender if payments are missed.
How much will a missed payment charge cost?
These charges vary dependent on both the lender and the mortgage deal on offer. Some mortgage deals may not have any missed payment charges, but take possession of the property after so many missed payments.
Mortgage account fee
The mortgage account fee is similar to the closure fee and the arrangement fee. Usually, if you have paid an account fee, you shouldn't have to pay either the closure fee or the arrangement fee, or potentially neither. The account fee covers the costs of setting up and maintaining your account with the lender.
What will an account fee cost?
Typically, a mortgage account fee will cost several hundred pounds.
Telegraphic transfer fee
The telegraphic transfer fee is simply the charge that needs to be paid to the conveyer to cover the electronic transfer of money related to your house move.
The property lawyer is required to let you know whether there will be a telegraphic transfer fee and how much it will cost before they are incurred, so make sure you are told.
How much will a telegraphic transfer fee cost?
The telegraphic transfer fee is dependent on the deal, but can cost between £25 and £75.
Valuation fees are charged because the lender wants to know that the amount that they are lending is accurate to the value of the property. There are several kinds of valuations, and the lender's evaluation is likely to only be the basic version, looking just at the property value, not at repairs or maintenance that might be needed. You can look into having your own valuations carried out. See the valuations page for more information.
How much will a valuation cost?
The cost largely depends on the value of the property and the valuation that the lender uses. They can be anywhere between £150 and £2,000. Valuations that you have done yourself may cost more or less, depending on the company and the type of valuation you have, as well as the overall value of the property.
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