A guide to mortgage fees and costs
There are a number of fees and charges you might need to pay if you’re taking out a mortgage. These include mortgage broker fees, adviser fees, valuation fees, arrangement fees and more. Use our handy mortgage costs table to find out how they all work and how much you might have to pay.
Fees and charges
Wondering how much mortgage fees will cost you? It can depend on a number of factors, like your personal situation, or the mortgage product you’re applying for.
The table below will give you an idea of what to expect.
Lenders can use different terms to describe their fees, so make sure you know what each cost includes and when you’ll need to pay.
- Since March 2016, mortgage lenders have to include any mortgage related fees, such as redemption charges and valuation fees, as part of the annual interest calculation. This way of calculating the interest is called the Annual Percentage Rate of Charge or APRC.
- All mortgage product related costs should be outlined in a mortgage Illustration document. It is sometimes called a European Standard Information Sheet (ESIS), or an enhanced keyfacts Illustration with supplements of any required additional information as needed. Read more in keyfacts documents explaining your mortgage.
|Fee or charge?
||What’s it for?
||This is the fee for the mortgage product, and is sometimes known as the product fee or completion fee. You can sometimes add this to your mortgage, but this will increase the amount you owe, your interest and your monthly payments.
||Anything from £0 to over £2,000.
||This is sometimes charged when you simply apply for a mortgage deal and is not usually refundable even if your mortgage falls through. Some mortgage providers will include it as part of the arrangement fee, while others will only add it on depending on the size of the mortgage.
||The mortgage provider will value your property and make sure it’s worth the amount you wish to borrow. Some lenders might waive this fee on certain mortgage deals. You can also pay for your own property survey to identify all the repairs or maintenance that might be needed.
The lender’s survey only looks at the property value, not necessarily the potential problems and future costs.
See our guide to the different Survey types and costs.
|£150-£1,500 depending on the value of the property.
|Telegraphic transfer fee
||Sometimes known as CHAPS (Clearing House Automated Payment System), this fee pays for your mortgage provider to transfer the money to your solicitor. It’s usually non-refundable, so if the deal falls through you probably won’t get the money back.
|Mortgage account fee
||This pays for the lender’s administration costs in setting up, maintaining and closing your mortgage. If you’ve paid this fee, then it’s unlikely that you’ll need to pay the exit fee (see below) although an early repayment charge (see below) might still apply if you close the mortgage early.
||Some lenders might charge a fee or fees if your account is in arrears.
||The penalty for missed payments depends on each lender’s rules. Failure to keep up with mortgage repayments could also result in your home being repossessed.
|Mortgage broker fee
||This fee is for a mortgage broker, if you choose to hire one, for arranging the mortgage or giving you advice. Some mortgage brokers won’t charge a fee and instead take commission from the mortgage provider.
Read our guide to Choosing a mortgage – how to get the right deal.
|On average £500 or a commission depending on the value of the mortgage.
|Higher lending charge
||Not all lenders charge this fee and it’s only likely to be a requirement if you have a small deposit, as this pays for the lender’s insurance if you can’t pay back the mortgage and they have to sell your property at a loss. The fee is often 1.5% of the mortgage – for example, £3,000 on a £200,000 mortgage.
||If applicable, this is usually 1.5% of the mortgage.
|Fee for own buildings insurance arrangements
||Not all lenders charge this now, so check first. Sometimes known as a freedom of agency fee or own buildings insurance fee. This fee sometimes applies if you decide to find your own buildings insurance, rather than take the one offered to you by your mortgage provider.
It can save you more money in the long run by paying this fee and shopping around for your own insurance needs.
|Early repayment charge
||This fee might not always apply, so be sure to check what the rules are with each mortgage provider, especially if you want to make an early repayment in the future. If you already had a mortgage, check your keyacts illustration or European Standard Information Sheet (ESIS) document to see what the cost is.
Typically the charges range from 1–5% of the value of the early repayment.
For example, a £100,000 mortgage with a 3% charge would cost you £3,000. This covers lender costs if you repay all or part of your mortgage earlier than the agreed term or deal period.
The mortgage provider might also ask for any rewards or incentives paid to you to be returned, such as discounts on legal fees or cashback.
|Typically 1-5% of the value of the early repayment.
||This is a fee to your lender when you repay your mortgage, even if you are not repaying it early. If you’ve already paid the mortgage account fee then it’s unlikely you’ll need to pay this particular fee as it will usually include set up and maintenance, as well as the closure of the account. Check what your mortgage account fee covers to make sure.
Mortgage-related charges can add thousands of pounds to your costs.
- Moving costs
- Legal and survey fees
- Stamp Duty on residential property purchases above £125,000
First-time-buyers will pay no Stamp Duty on the first £300,000 for properties worth up to £500,000.
If you’re purchasing an additional home, for example a buy-to-let property for more than £40,000, you’ll have to pay an extra 3% on top of each Stamp Duty band.
Picking the right mortgage deal
Buying a property is a big investment and it is a good idea to get some advice.
Some mortgage deals might seem attractive, but fees can quickly add up.
When comparing mortgage offers, add up all the charges over the length of the deal as well as your monthly repayments.
For example, if your repayments are £1,000 per month on a two-year fixed-rate mortgage, plus £300 in fees, the total cost of the deal is £24,300.
Mortgage comparison websites
Comparison websites are a good starting point when trying to find a mortgage tailored to your needs.
We recommend the following websites:
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