How Much Should You Expect to Pay in Mortgage Fees?

How Much Should You Expect to Pay in Mortgage Fees?
Home Blog How Much Should You Expect To Pay In Mortgage Fees?
Mark Langshaw

Author: Mark Langshaw

Content Manager

Updated: May 14, 2024

The interest rate you’ll pay on your mortgage is, unfortunately, far from the only cost involved – but, don’t worry; the additional fees don’t have to be extortionate.

Knowing exactly what you’ll have to pay out for in advance can help you budget effectively, and there are ways you can keep additional costs to a minimum.

Read on to find out everything you need to know about mortgage fees and how to save money on them.

What fees to expect if you’re applying for a mortgage

Here are the typical fees to factor in during the application process

  • Arrangement/product fee: This is a fee your lender may charge for arranging the mortgage. It can range from nothing to around £2,000, but bear in mind that deals with no product fee often have higher rates. Some lenders will allow you to add this to the mortgage, although this will increase your debt and interest payments.
  • Booking fee: This is a cost that is sometimes incurred when you formally apply for your mortgage and it can range between £99 and £250 on average. Some lenders will roll this into the arrangement fee and others might waive it for smaller mortgages.
  • Valuation fees: A charge your mortgage lender will bill you for to have the property valued. They will need this information to ensure that it’s worth what you have agreed to pay for it. Some lenders won’t charge this fee on certain deals, but when it does apply, you can expect to pay between £250 and £1,500.
  • Telegraphic transfer fee: There’s a small fee involved when your mortgage provider transfers the funds to your solicitor so the purchase can be completed, usually between £25 and £50.
  • Account fee: The account fee is basically an admin charge that covers the setting up, maintenance, and eventual closure of your mortgage account, typically £100-£300.

Costs that are sometimes applicable

The following costs are sometimes applicable to a mortgage application, depending on the options and extra products and services the borrower chooses…

  1. Homebuyer surveys: The valuation report the lender carries out won’t spot potential issues with the property such as rising damp, subsidence or Japanese knotweed. You’d need a homebuyer survey for this and they typically cost between £200 and upwards of £600, depending on which level of inspection you choose.
  2. Higher lending charge: Sometimes payable if you take out a mortgage with a small deposit to cover extra safeguarding for the lender. Not all mortgage providers will bill you for this but those which do usually ask for 1.5% of the mortgage amount.
  3. Freedom of agency fee: Some lenders prefer you to take your buildings insurance with them and will charge a small fee if you want the right to source it from another provider. This is usually around £25 and can be worth paying if significantly cheaper insurance is available elsewhere.
  4. Additional insurance: Most lenders will expect you to have some form of home insurance agreed before they’re willing to approve you for a mortgage, but most experts recommend considering additional protection such as life insurance or critical illness cover, which can vary in price depending on the level of cover.
  5. Broker fees: If you use a mortgage broker (recommended), this usually carries an extra fee which is usually a percentage of the loan amount, or around £500 on average. Most experts recommend paying the fee as the amount a broker can save you by securing you a better deal should leave you in pocket overall.

Fees to expect after securing your mortgage

The table below highlights the extra costs that mortgage holders might encounter during the term of their mortgage.

Fee Details Amount
Missed payment penalties Some lenders will hit you with a financial penalty for missing a mortgage payment or falling into arrears. The amount is set at the lender’s discretion and can vary depending on the rules they set around missed payments.
Early repayment charges (ERCs) Applicable with some lenders if you pay off your mortgage in its entirety before the end of the agreed term. Usually 1-5% of the early repayment amount.
Exit fees This is an admin charge for closing your mortgage account when you’ve finished repaying the debt. Usually £75 to £300.

Other costs to factor in

Other costs you will encounter when buying a property include…

  • Legal fees: You’ll need a solicitor to oversee the transaction and their fees can range between £850 and £1,500 for a standard residential property purchase.
  • Stamp duty: The amount you will pay will depend on the value and purpose of the property. See our article about stamp duty to find out more.
  • Removal costs: The amount you will pay for removals will vary depending on the size of the house, the amount of items you’re having transported and how far it is being taken. On average you can expect to pay between £350 and £1,400.

How to save money on your mortgage fees

Not only can the right mortgage broker potentially help you secure a better deal with a lower interest rate, they can also make sure you don’t pay over the odds in fees.

They will compare mortgage products across the market and work out the overall cost of each of them, factoring in all extra charges and the interest rate, to make sure you’re fully aware what you’ll be paying over the course of the mortgage term.

Your mortgage broker can also recommend solicitors and insurance plans for you and may have access to exclusive deals that are more cost-effective than ones you could find yourself.

Make an enquiry with us and we’ll match you with a broker who can compare mortgage fees across the market and help you avoid feeling the sting from unnecessary charges.

Maximise your chances of approval, whatever your situation - Find your perfect mortgage broker

By browsing our site you consent to our use of cookies.