Navigating the financial landscape of acquiring a mortgage can often feel like deciphering a complex puzzle, especially with the myriad of fees and costs that accompany the process. To demystify this journey, we’ve compiled a comprehensive guide detailing every conceivable fee, including when they’re due and their approximate costs.
Valuation Fee
Before a lender offers you a mortgage, they must ensure the property’s value matches your purchase price or estimated worth during a remortgage. This assessment might also uncover costly issues like dampness or subsidence. Valuation fees, which can range from £100 to over £1,000, are typically based on property value, not size. These fees are usually required upfront for purchases, though remortgages might see these waived.
Product Fee
Mortgages come with an introductory product or interest rate, often accompanied by a fee. These fees can vary, appearing as fixed amounts (£0, £495, £995, £1,495, or £1,995) or as a percentage of the loan size. Navigating these fees and finding the right mortgage product is where a professional broker, like Lynton Mortgages, becomes key. Product fees can sometimes be added to your loan, avoiding upfront payment, but these will then be paid over the term of the loan. Again, a mortgage broker can help compare the cost of paying any product fee upfront or adding to the loan.
Booking Fee
Less common today, booking fees are sometimes charged in addition to product fees, usually amounting to £99 or £199. Payable upfront, these fees are generally non-refundable, covering the cost of reserving your mortgage product.
Administrative Fee
Upon mortgage redemption, lenders charge an administrative fee for tasks like notifying the Land Registry and returning title deeds. These fees, up to £250, are typically charged at the mortgage’s end, with some lenders adding the fee to your loan without interest.
Telegraphic Transfer Fee
To ensure funds reach your solicitor in time for completion, lenders use telegraphic transfers, charging borrowers £15 to £35. This fee is usually deducted from the loan amount sent to the solicitor.
Early Repayment Fee
Also known as Early Repayment Charges (ERCs), these fees apply if you repay part of your mortgage early during a fixed term. Most mortgages allow up to 10% overpayment per year without penalties.
Legal Fees
Covering the solicitor’s work on behalf of the lender, these fees are included in the solicitor’s total charges to the borrower, primarily for purchase transactions.
Buildings Insurance Fee
An older fee for verifying acceptable buildings insurance, now rarely charged by lenders.
Broker Fees – What You Need to Know
In addition to the lender’s fees, working with a mortgage broker like Lynton Mortgages may involve broker fees. These fees are for the bespoke advice and services provided, including finding the best mortgage deals, handling application processes, and offering tailored financial guidance. Broker fees vary depending on the complexity of your mortgage needs and the level of service provided. At Lynton Mortgages, we pride ourselves on being fee free for standard residential mortgages. We will always discuss any potential fees upfront, ensuring you’re informed every step of the way.
Additional Fees
Mortgage illustrations might mention potential additional fees or taxes, often related to the solicitor’s work rather than the lender. It’s crucial to review your solicitor’s quotation and any additional charges list thoroughly.
