Pricing How to sell Sell to us
log in
Sell your home with Emoov

Everything You Need To Know About Mortgage Fees

May 19, 2014 by eMoov

There are a bewildering number of different fees when you take out a mortgage loan, and they can make it a real headache to try and calculate the true cost. We’ve listed the most important fees below to help you understand exactly what you’ll be paying for, and when.

Account Fee

What is an Account Fee?

This fee is charged for the administration costs of creating, managing, and closing your account across the duration of the mortgage. If this fee applies, there will not be a separate exit fee (see below).

How much?

Between £100 and £300.

When will I pay?

Normally added to the mortgage total, but some lenders will allow you to pay it up-front.

Arrangement Fee (Completion Fee)

What is an Arrangement Fee?

A general fee charged for the lender to set up the mortgage.

How much?

Some lenders do not charge an arrangement fee, while others can charge over £2,000. As a general rule, the lower the interest rate offered on the loan, the higher this fee will be.

When will I pay?

This fee is usually added to your mortgage balance, but can be paid up-front.

Booking Fee (Application Fee)

What is it a Booking Fee?

This fee is paid to ‘reserve’ the mortgage deal while your application is processed.

How much?

Booking fees vary between lenders, but you should expect a figure of between £100 and £300.

When will I pay?

Usually paid up-front, but some lenders will allow you to add it to the mortgage total.

Broker Fee

If you use an independent mortgage broker, this fee covers advice and/or the arranging of the mortgage.

An average of £500, but many brokers omit this fee as they receive commission from lenders instead.

If charged, this fee goes directly to the broker; either on an hourly basis, or as a single payment.

Exit Fee (Porting Fee, Release Fee, Transfer Fee)

What is an Exit Fee?

Charged when redeeming a mortgage, either because it’s been repayed in full or you’re switching to another lender. It’s usually only possible to port fixed-rate mortgages, but that depends on the lender.

How much?

Many lenders have abolished exit fees altogether after a regulation clamp-down in 2007; those that remain are from £50 to £300. If you are considering switching lenders, ask your provider for a redemption statement to see how much it will cost.

When will I pay?

Exit fees are paid upon the closing of an existing mortgage.

Higher Lending Charge (HLC)

What is a Higher Lending Charge?

If your mortgage covers most of the value of the property, this fee is added. It allows the lender to take out extra insurance for themselves in case you can’t pay back your mortgage in full.

How much?

Typically 1.5% of the loan amount (e.g. a £175,000 loan would result in a £2,625 HLC).

When will I pay?

Depending on the lender, it can be paid on completion, up-front, or added to the mortgage total.

Legal Fee (Conveyancing Charge)

What is a Legal Fee?

These fees are paid to cover legal work undertaken as part of the mortgage arrangements.

How much?

The cost is set by the solicitor on behalf of the lender, but is often around £400.

When will I pay?

Usually on completion, but some lenders

Own Insurance Fee

What is an Own Insurance Fee?

This will be charged if you take out your own building insurance, rather than using the policy provided by the lender. It allows them to check if the new policy is sufficient to protect them in case of severe damage.

How much?

Around £25, but this may be payable yearly (or if you switch insurer), so check with your lender.

When will I pay?

This fee is paid on completion.

Telegraphic Transfer Fee (CHAPS Fee)

What is a Telegraphic Transfer Fee?

A fee sometimes charged for the transfer of the mortgage funds to your solicitor.

How much?

Somewhere around £50.

When will I pay?

This fee is paid on completion.

Valuation Fee

What is a Valuation Fee?

It’s paid to the lender for a basic valuation of the property. This valuation is only intended to determine if the home is safe to lend against, and is not the same as a homebuyers or structural survey.

How much?

The price is set according to the value of the property, but can be between £150 and £1,500. There can sometimes be an extra valuation administration fee of around £75.

When will I pay?

This fee is paid up-front when making your application.

All of these fees should be outlined in the documents you receive when applying for a mortgage, and free independent advice can be found at The Money Advice Service.

Resources for house buyers
May 19, 2014 by eMoov

Further reading...