Whenever you take out a mortgage, there will be several fees and charges that you will need to pay. From mortgage broker fees and adviser fees to valuation and arrangement fees.
So, here is a handy mortgage costs guide to find out how they all work and how much in fees you might have to pay to obtain a mortgage.
Fees and charges
Are you wondering how much mortgage fees will cost you? It can depend on several factors, including your personal situation, or the mortgage product you’re applying for. However, the table below will give you an idea of what fees and charges to expect.
Different lenders will use different terms to describe their fees, so make sure you know what each cost includes and when you’ll need to pay it.
Mortgage costs
Since March 2016, mortgage lenders must include any mortgage related fees, such as redemption charges and valuation fees, as part of the annual interest calculation. This is known as the ‘Annual Percentage Rate of Charge’ (APRC).
| Fee or charge? | What’s it for? | Typical costs |
| Arrangement fee | This is the fee for the mortgage product – sometimes known as the product fee or completion fee. You can sometimes add this to your mortgage, but doing this will increase the amount you owe, your interest and your monthly payments. | Anything from £0 to over £2,000. |
| Booking fee | This can be charged when you apply for a mortgage deal. This isn’t refundable, even if your mortgage falls through. Some mortgage providers will include this within the arrangement fee, but others will only add it on depending on the size of the mortgage. | Around £99-£250. |
| Valuation fee | This fee is required when the mortgage provider values 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 any repairs or maintenance that might be required. | £150-£1,500 depending on the value of the property. |
| Telegraphic transfer fee | This fee pays for your mortgage provider to transfer the money to your solicitor – sometimes known as CHAPS (Clearing House Automated Payment System). This is non-refundable, so if the deal falls through you won’t get the money back. | Typically £25-£50. |
| 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 you’ll need to pay the exit fee. Although an early repayment charge might still apply if you choose to close the mortgage early. | Typically £100-300. |
| Missed payments | Some lenders might charge this fee(s) 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 for arranging the mortgage or giving you advice. Some mortgage brokers won’t charge a fee and instead take commission from the mortgage provider. | On average £500. |
| Higher lending charge | This pays for the lender’s insurance if you can’t pay back the mortgage and they must sell your property at a loss. Not all lenders charge this fee and it’s only likely to be a requirement if you have a small deposit. | If applicable, this is usually 1.5% of the mortgage. |
| Fee for own buildings insurance arrangements | This fee can apply if you decide to find your own buildings insurance, rather than take the one offered to you by your mortgage provider – sometimes known as a freedom of agency fee or own buildings insurance fee. Not all lenders charge this, so always check. It can save you more money in the long run by paying this fee and shopping around for your own insurance needs. | Likely to be £25. |
| Early repayment charge | This fee might not always apply, so always check. If you already had a mortgage, check your key acts illustration or European Standard Information Sheet (ESIS) document to see what the cost is. 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. |
| Exit/Closure fee | 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 as it will usually include set up and maintenance, as well as the closure of the account. | Typically £75-£300. |
