Mortgage Fees

Common mortgage fees

Different fees can apply at different stages of getting a mortgage. Not every deal charges all of them, and some lenders run fee-free products with a slightly higher rate instead.

• Arrangement or product fee — charged by the lender to set up the mortgage; can sometimes be added to the loan
• Booking or application fee — a smaller upfront charge to reserve a deal
• Valuation fee — for the lender’s assessment of the property’s value
• Broker fee — if you use a mortgage broker who charges for advice
• Legal (conveyancing) fees — for the solicitor or conveyancer handling the purchase

Early repayment charges

Many fixed and discounted deals carry an early repayment charge (ERC) if you repay the mortgage, or overpay beyond an allowed limit, during the deal period. ERCs are usually a percentage of the amount outstanding and often reduce over the years of the deal. Tracker and standard variable rate mortgages tend not to have them, but always check your own contract.

Comparing the true cost

A deal with the lowest interest rate can work out more expensive once a large arrangement fee is included, especially on a smaller mortgage. Look at the total cost over the deal period — the interest plus the fees — rather than the rate alone. Adding a fee to the loan spreads it out but means you pay interest on it over the full term.