How Much Should You Expect to Pay in Mortgage Fees?

The interest rate on your mortgage is far from the only cost involved, but don’t worry—the additional fees don’t have to be excessive.

Knowing what to expect in advance can help you budget effectively, and there are ways to minimize these extra costs.

Read on to learn more about mortgage fees and how to save money.

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 to set up the mortgage. It can range from £0 to around £6,000, but remember that deals with no product fee often have higher interest rates. Some lenders allow you to add this fee to the mortgage, but this will increase your overall debt and interest payments. Some lenders may charge a percentage of the mortgage rather than a flat fee, although this does tend to be mostly for buy-to-let mortgages.
• Booking fee: This is a cost that is sometimes incurred when you formally apply for your mortgage. On average, it can range between £99 and £250. Some lenders will roll this into the arrangement fee, and others might waive it for smaller mortgages.
• Valuation fees: Your lender will charge you to have the property valued, ensuring it is worth the amount you’ve agreed to pay. Some lenders waive this fee on certain deals, but you can expect to pay between £100 and £1,500 when it applies.
• Telegraphic transfer fee: When your mortgage provider transfers the funds to your solicitor so the purchase can be completed, a small fee is charged, usually between £25 and £50.
• Account fee: The account fee is an admin charge that covers the setting up, maintenance, and eventual closure of your mortgage account. It is typically £100-£300.

Costs that are sometimes applicable

The following costs may apply to a mortgage application, depending on the options and additional products or services the borrower chooses:

1. Homebuyer surveys: The lender’s valuation report 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: A higher lending charge is 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 that do usually ask for 1.5% of the mortgage amount.
3. Freedom of agency fee: Some lenders prefer you take your building insurance with them and will charge a small fee if you want 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 upon 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 (which is recommended), this typically incurs a fee. This may be a percentage of the loan amount or a flat fee, often around £500 on average. Experts recommend paying this fee, as brokers can often save money by securing better deals. This is because brokers can place the mortgage with a lender with a better interest rate, and some deals are only available to brokers.

Fees to expect after securing your mortgage

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

Other costs to factor in

Other costs you will encounter when buying a property include…

• Legal fees: A solicitor is required to oversee the transaction. For a standard residential property purchase, fees typically range from £1,00 to £1,750.
• Stamp duty: The amount you pay depends on the value and purpose of the property. See our article about stamp duty for more details.
• Removal costs: Removals vary depending on the size of the house, the volume of items being moved, and the distance travelled. On average, expect to pay between £500 and £4,000, without storage.

How to save money on your mortgage fees

The right mortgage broker can help you secure a better deal with a lower interest rate and ensure you don’t pay over the odds in fees.

They will compare mortgage products across the market and calculate the overall cost of each, factoring in all extra charges and the interest rate to ensure you’re fully aware of what you’ll be paying over 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 the sting of unnecessary charges.