When considering the types of mortgages that are available, you have more to think about than the interest rates that will form part of your monthly repayments. You will need to consider the mortgage lender’s fees too. These are often charged to cover the lender’s administration costs, so it’s important to budget for these when looking for the right mortgage deal.
It is our opinion as an experienced mortgage broker that understanding the fees associated with a mortgage can be confusing. Our experienced mortgage advisors have a deep understanding of the fees involved and will work hard so you need to pay as little as possible for the best deal. To give you an idea of the types of mortgage fees lenders charge, check out our guide below.
Types of Mortgage Lenders Fees
The following are some of the mortgage fees you need to budget for, on top of the expected monthly repayments you will need to cover.
Mortgage arrangement fee
An arrangement fee is what you pay the lender to set up your mortgage. It can also be known as the completion fee or product fee and reservation fee. You don’t always have to pay an arrangement fee upfront as they can be added to your mortgage repayments. However, if you do add these to your mortgage, your monthly payments will become higher as you will need to pay more interest.
Mortgage booking fee
You pay this fee when applying for your mortgage. It can sometimes be added to the arrangement fee but it depends on the mortgage lender. Unfortunately, this fee is non-refundable so if your mortgage falls through, you are unlikely to get your money back.
Mortgage valuation fee
To make sure a property is worth what you say it is, the lender will send out a surveyor to assess its value. To cover this cost, you may be charged a mortgage valuation fee. Some mortgages come with free valuations so there isn’t always a charge but it varies between different lenders.
Please note: The mortgage valuation is done purely to assess the value of the property and not the overall condition of the property. You will have to pay for your own property survey if you want to identify any repairs that might need doing.
Telegraphic transfer fee
Lenders charge this fee because of the costs involved when transferring money to a solicitor. It’s often non-refundable so you are unlikely to get it back if your mortgage deal falls through.
Mortgage account fee
The mortgage account fee covers the lender’s administration costs when setting up, maintaining, and closing a mortgage. If you pay this fee, you typically won’t be charged an exit fee when you close your mortgage account (see below).
Mortgage exit fee
If you decide to remortgage to a better deal with the same lender or if you switch to another deal with a different lender, you will often be charged the mortgage exit or closure fee. You can also be charged this fee when you pay off your mortgage.
Early repayment charge
If you come out of your mortgage deal before the term ends, you may have to pay an early repayment charge. In the majority of cases, this will be charged as a percentage of your loan, and it can add up to thousands of pounds. The early repayment charge is something to consider when comparing mortgage deals.
Mortgage broker fee
A mortgage broker fee isn’t a fee you pay to the mortgage lender but it’s still worth keeping in mind when working out your mortgage costs. All mortgage brokers receive a commission from mortgage lenders but some charge their customers a fee on top of this.
Please note: YesCanDo Money is a fee-free mortgage broker. Therefore, you will not be charged any fees if you decide to use our services.
Mortgage related fees and costs
We have covered the typical mortgage fees lenders will charge you, although there may be other mortgage related fees, depending on the lender and mortgage product. These can include:
- Higher lending charge – If you choose to make a small deposit, the lender will use the higher lending charge to buy an insurance policy that protects them should you later default on your mortgage.
- Own buildings insurance fee – If you arrange for your own buildings insurance instead of using that offered by the mortgage provider, your lender may charge you a small fee.
How much are mortgage fees?
| Mortgage Fee Type | Fee Amount |
|---|---|
| Mortgage arrangement fee | Up to £2,500 |
| Mortgage booking fee | Between £99 to £250 |
| Mortgage valuation fee | Between £150 to £300 |
| Telegraphic transfer fee | Between £25 - £50 |
| Mortgage account fee | Between £100 - £300 |
| Exit fee | Between £75 to £300 |
| Early repayment charge | 1% to 5% of loan |
| Mortgage broker fee | Between £0 to £500 |
| Higher lending charge | A percentage of what you borrow |
| Own buildings insurance | Usually £25 |
Related reading: Best Mortgage Lenders UK
Fee-Free Mortgage Brokers to get best mortgage deal
There are advantages to using a mortgage broker as you can often be pointed to better deals than those that are being advertised. You can also receive expert advice from people with years of experience within the mortgage industry.
However, some mortgage brokers will charge their customers a fee. This is on top of the commission that they get from the lender (usually about 0.35% of the loan).
Mortgage broker fees can vary. Some charge 0.3% of the loan size while others will charge as much as 1%. Before you decide to use the services of a mortgage broker, you should ask them to be upfront about their charges.
If you choose to use a no fee mortgage broker, you won’t be charged anything. The money they make is from the mortgage lender’s payment when the mortgage completes.
You won’t be at a disadvantage if you choose a no fee mortgage broker as you can expect the same level of service that a fee-charging broker would offer you. In some cases, you might even receive a better level of service, depending on the broker’s level of experience and expertise.
Should you choose a ‘whole of market mortgage broker, you will be at a further advantage as you will have access to mortgage deals that may not be widely advertised by mortgage lenders online or on the high street.
Please note: YesCanDo Money is a fee-free, whole of market mortgage broker, so you can benefit from fee free mortgage advice and support and access to over £14,000 mortgage deals on the market.
Benefits of Using a Fee-Free Mortgage Broker
When applying for a mortgage, you have a range of mortgage-related fees to consider, such as the arrangement fee, application fee, and a range of other lender fees and charges. To reduce your list of expenses, it naturally makes sense to use the services of a no-fee mortgage broker. By doing so, you can expect the following benefits.
You will have more money in your bank account
Not only will you get a great mortgage deal with the lowest interest rates when you use the services of a free mortgage broker, but you will also get mortgage advice and support for free. As such, these are both ways to save money when starting your mortgage journey.
The money you save can go towards the total cost of your mortgage
The more money you save, the more money you have to spend on other things related to your house move. But aside from removal costs, stamp duty, legal fees, and the cost of new furniture, you could use the money you save on your mortgage-related fees and costs. You could also put it towards a bigger deposit as you may benefit from a lower interest rate if you put down more money at the outset.
You will save time as well as money
You are guaranteed to save money when using the services of a free mortgage broker. With fewer fees and costs to worry about, you will have fewer financial worries too!
However, you will also save yourself a lot of time, as your mortgage broker will do all of the hard work that is related to your mortgage.
They will compare mortgage deals, give you advice on mortgage fees and different mortgage types (such as fixed-rate and variable mortgages), prepare your mortgage application, and liaise with your mortgage provider and solicitor. They will do all of this and more for FREE, so as we said, you will save both time and money!
How YesCanDo Money Can Help
Are you looking for a great new mortgage deal? If so, get in touch with our team at YesCanDo Money. With over 30 years of experience in the mortgage business, we can offer you an excellent mortgage service. You won’t have to cover the fees and costs that other mortgage brokers charge and you won’t have to spend time comparing mortgage products either.
After getting to know more about your personal circumstances, we will tailor our services to your needs, making sure you get the right mortgage product for your situation. We will also liaise with your mortgage provider, solicitor, and other relevant parties, both before and after you have received your mortgage offer.
So, if you’re after the lowest interest rate on your mortgage, and if you want expert advice and practical support, please consider the services we can offer you. We will work hard to make sure you get a mortgage product you can afford, even if you have been turned down by a mortgage provider in the past. To find out more, use the contact details on our website and get in touch with us today!
