When you secure a mortgage with a lender, there will generally be fees to pay, either upfront or added onto the loan. Although adding the fees onto the total loan amount may seem the best option, you will be paying interest on the fees.
Most lenders will charge fees, although some may charge a higher interest rate instead. When you select a mortgage, don’t forget to factor in the cost of the fees and how it will impact on the cost of your mortgage. A CeMAP qualified mortgage adviser will be able to help you calculate the total cost.
There are various types of mortgage fee, including:
A mortgage booking fee, which is usually between £100 and £200, and non-refundable.
An arrangement fee, which varies from a few hundred pounds to thousands, depending on the deal itself.
A mortgage account fee is the amount you will be charged to have your account set up and maintained. Although the fee is normally added to your mortgage loan, it is sometimes possible to pay the fees upfront.
The CHAPS fee is the amount you have to pay the lender for sending the monies to your solicitor, generally between £25 and £50.
Valuation fees are often charged by the lender for valuing the property to ensure that it is worth the amount you want to borrow. Charges vary but are usually between £200 and £1,000.
There are many fees which may be payable when you secure a mortgage, so make sure you seek advice prior to deciding which fees should be paid upfront.