Mortgage Fees

When you see the mortgage deals that are offered by lenders you will soon start to notice that many deals have mortgage fees associated with them. There are also some mortgage fees that you don’t see until you get a full mortgage illustration. What are these fees?

Let us review the common mortgage fees that you are likely to encounter and what they are for.

What are mortgage fees for?

Arrangement fee

Many deals on offer have an arrangement fee and usually as a rule of thumb the better interest rates have a higher fee. This can be expressed as a percentage of the amount that you are borrowing or a flat fee for example £999 no matter what size the loan is. Arrangement fees are generally deducted from the mortgage advance on completion day or added to the loan.

Booking fee

This is a fee that is paid on application for the mortgage with the intention of reserving your mortgage deal. In reality it is an arrangement fee or part of the arrangement fee paid in advance. Quite often these fees are not refundable once you apply for your mortgage.

Valuation fee

Before a lender can offer you a mortgage they need to make sure that the property is suitable for securing a loan against it. A qualified valuer will inspect the property to do this and in most cases a lender will charge a fee. You will see some mortgage deals with a free valuation or a refund of the valuation after you have moved home. Your mortgage broker will take into account any free offers when comparing deals as a free offer may be at the expense of a higher interest rate or arrangement fee. Also be aware that a valuation report is not a survey although it is carried out by a surveyor.

Legal fees

If your solicitor does not meet the requirements of the mortgage lender you need to be aware that the lender may appoint another solicitor to handle part of the conveyancing and charge you the fees involved. Ask your solicitor and mortgage broker to ensure that you will not incur this charge.

Insurance fee

Lenders would like you to buy from them buildings and contents insurance which although good is usually quite expensive. If you don’t use their policy they will charge a fee to ‘examine’ your policy to ensure that their interests are protected should your home be severely damaged or destroyed. In our experience they charge the fee but very rarely examine the policy.

Telegraphic Transfer fee (TT Fee)

To make sure that your mortgage money gets to your solicitor at the right time on completion day there is a fee called the telegraphic transfer fee and this is paid to your solicitor as the lender will deduct this from the advance.

Redemption Penalty

If you redeem your mortgage in full or in part early during the special deal there will often be a fee for doing this so please be aware of the penalties involved in any mortgage. These can be quite high mortgage fess, for example it could be 5% of the amount redeemed. Many deals will allow you to overpay in part by up to 10% of he amount outstanding without a penalty. Be aware too of redemption penalties that extend beyond the end of the special deal.

Closing down fee

When you repay your mortgage in full or make the last payment there is a fee to release the deeds and place the property firmly in your ownership or if selling to simply close it down. This fee can be several hundred pounds and your mortgage illustration and offer will show this amount. Some lenders let you pay it on purchasing your home and therefore you can forget about paying it later.

Make sure which mortgage fees you have to pay

These are the most common fees that you will see but there may be others that can occur so always look carefully at your mortgage illustration, talk to your mortgage broker and solicitor and read your mortgage offer carefully. Here are The Really Useful Mortgage People we will ensure that you are aware of all the mortgage fees and explain them to you.

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