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Mortgage fees - explanation

An explanation of mortgage fees

A mortgage often comes with unexpected extras. Namely, different fees which, when put together with the interest you have to pay on your mortgage, can add up to a considerable amount of money. Whether you're remortgaging, moving to a new house and therefore switching lender or if you're a first-time buyer, here's some of the typical fees you can expect to pay.

Booking fee – When simply applying for a mortgage, some lenders charge this 'booking fee'. The typical cost is between £99 - £250.

Arrangement fee – This is charged by lenders for the time and cost of setting up the loan. It can be added to your mortgage and can cost anything up to around £2000 depending on the lender. It pays to compare the arrangement fees of different lenders along with their interest rates.

Valuation fee – A survey is carried out to find out your property's worth as well as identify any problems and repairs that may be needed. The cost of this is the valuation fee. The price can range from being given free by your mortgage provider to around £1,500.

Legal fees – This covers all the work your solicitor or other legal professional carries out for you. It includes, the conveyancing of your property, stamp duty and search fees. Some solicitors charge a percentage of the mortgage value or on a fixed fee basis.

Higher lending charge (HLC) – Again, not all lenders charge this fee. It's applied when the amount borrowed is 90% or above of the property's value. It's aimed to protect the lender in case you default on the mortgage repayments.

Early repayment fees – If you have a fixed-rate or discounted-rate interest mortgage and want to end the agreement early, your lender may charge an early repayment fee. Normally this is around 1-5% of the early repayment value.

Exit fee – This can be charged by your lender when you finish paying your mortgage, switch to another lender or remortgage with the same lender. The cost typically ranges between £50 - £200.

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