What Fees Do I Need To Pay To Get A Mortgage?

5th May 2017

When you take out a mortgage, the fees you have to pay to your mortgage lender may include a booking fee, an arrangement fee and a property valuation fee. You might have to pay other fees once your mortgage is in place, including an early repayment charge if you repay before your initial deal is over.

Summary of mortgage fees

What fees will I pay to take out a mortgage?

What other fees are involved in buying a home?

What fees will I have to pay once the mortgage is in place?

Using Trussle to find a mortgage

Summary of mortgage fees

Mortgage Fees Table

What fees will I pay to take out a mortgage?

It’s important to take mortgage fees into account when you’re calculating the cost of buying a property. The fees you’ll have to pay and the amounts charged will vary depending on the lender and the mortgage deal, but these are some of the fees you’re likely to come across.

Set-up or booking fee

Sometimes the lender will charge a fee when you apply for a mortgage, although occasionally this set-up fee is refundable if the mortgage falls through. Set-up fees are sometimes included in the arrangement fee (see below) or they may be charged separately. If you have to pay this fee, it will generally be between £99 and £250.

Mortgage arrangement fee

This is the main fee charged by the provider when you take out your mortgage, and it should be displayed prominently when you’re looking at a mortgage deal. Often, the lower the initial interest rate, the higher the mortgage arrangement fee. It’s important to do some calculations to figure out whether it’s worth paying a higher fee for a lower rate.

Mortgage arrangement fees can be £2,000 or more, but the average is around £1,000. You can usually choose whether to pay this upfront or add it to your mortgage, in which case you’ll have to pay interest on it.

Mortgage account fee

Your lender may also charge a mortgage account fee, which is an administration fee for creating and managing your mortgage account. Paying a mortgage account fee usually means you won’t pay an exit fee when you close your mortgage account, although you’d probably still be liable to pay an early repayment charge if you left the deal early.

Mortgage valuation fee

Before approving your mortgage, the lender will want to check the value of your property to make sure it’s worth the amount you’re paying. They do this by getting a valuation survey, which you’ll usually have to pay for. The amount varies, but often valuation fees are in the region of £250 to £400, with higher fees often charged for more expensive properties. Sometimes the lender will offer a free valuation as part of the mortgage deal.

Transfer fee

You’ll usually have to pay a CHAPS or electronic transfer fee of around £25 to £50 to cover the cost of the mortgage provider transferring the money to your solicitor.

Higher lending charge

If your deposit is less than 10% or 20% than the property value, you may have to pay a higher lending charge. This covers your mortgage provider in case you can’t pay your mortgage and they have to sell your property at a loss. It’s usually charged at 1.5% of the mortgage value.

Own buildings insurance fee

If you decide to arrange your own buildings insurance rather than taking the insurance offered by the mortgage lender, you may have to pay a fee of around £25.

Mortgage broker fee

To make sure you find the most suitable mortgage, it’s a good idea to use a mortgage broker. Many traditional mortgage brokers charge a fee for their services, with UK broker fees currently averaging £500. If you use Trussle, there’s no broker fee - our services are completely free for you to use. Instead, we receive a fee from the lender when your mortgage application is approved.

What other fees are involved in buying a home?

When you’re buying a property, you’ll need to take into account other costs as well as the mortgage fees.

You’ll need to pay legal fees to the solicitor who is managing the property purchase. The amount you pay will depend on the property you’re buying and the complexity of the process, but legal fees tend to be around £700 to £1,000, plus an extra £300 for searches. Some mortgage deals may include free conveyancing.

It’s a good idea to get a survey, which involves an inspection of the structure of the property and a report that should indicate any major problems with the building. The cost of a survey depends on the value of your property and the type of survey you choose, but they can cost anything between a few hundred pounds to over £1,000.

You’ll also need to pay property tax called Stamp Duty Land Tax (SDLT) if you’re buying a property worth more than £125,000. SDLT is charged on a sliding scale according to the value of the property. Find out more on the government website.

Estate agents and removal companies can add additional costs to the move. Compare My Move have an online calculator that can provide an estimate for you to calculate the full cost of moving house which you may want to use.

What fees will I have to pay once the mortgage is in place?

Once your property purchase has completed, there are a few other mortgage fees that you might need to pay in certain circumstances.

Late payment fees

You’ll be paying an interest rate of course, which may be fixed or variable depending on your mortgage deal. You may have to pay penalties if you’re late making your mortgage repayments.

Overpayment fees

During the initial fixed or discounted period, most mortgage lenders only let you pay 10% of your balance per year as an overpayment, and will charge a fee if you overpay more than this. These penalties vary, but they’re often between 1% and 5% of the amount overpaid.

Early repayment charge

If you repay your mortgage before your initial period is over (because you decide to remortgage, for example) you’ll usually have to pay an Early Repayment Charge (ERC). This is normally charged as a percentage of the outstanding loan, so it can total thousands of pounds. It’s important to take this into account when you’re taking out your mortgage and deciding how long to fix it for.

Mortgage exit fees

Even once your initial period is over, when you close your mortgage account because you’ve paid off the loan or you’re switching to a new lender, your provider may charge you an exit fee. Typically, mortgage exit fees are between £50 and £300.

Using Trussle to find a mortgage

When you use Trussle to find a mortgage, we’ll look for a product based on your needs, and make a recommendation based on the overall cost during the initial term. We’ll take into account additional mortgage fees that can offset the savings of a lower interest rate, to make sure you’re getting the most suitable deal available. We’ll be clear about the fees you’ll need to pay your lender, and we won’t charge you a penny for using our services.

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