Fees To Be Aware Of When Taking Out A Mortgage 

There is no denying that buying a property is a very expensive task and there are several fees that you have to pay. From Licensed Conveyancer fees and Land Registry fees to Stamp Duty Land Tax and of course, the property deposit, these fees can quickly add up and it’s important to budget correctly for all of the expenses involved with buying a new home. 

If you’re unable to buy a property outright and you need a mortgage to make the purchase, it’s important to be aware there are several fees associated with taking out a mortgage too. In addition to the monthly mortgage repayments that you would be required to make, there are a few other fees that you may have to pay, including; 

Arrangement fee

It isn’t uncommon for mortgage lenders to charge an arrangement fee when setting up a mortgage for you. This fee is also referred to as a products fee, application fee, booking fee or completion fee. Arrangement fees differ from one mortgage lender to another, so always double-check how much this fee would cost you before accepting the mortgage offer. 

All buyers should be aware that you’re usually able to add the arrangement fee to the mortgage sum if you don’t want to pay it up-front. There are pros and cons to paying this fee off over the period of the loan, and it's beneficial to speak to a mortgage advisor about this in more detail.  

Valuation fee

Whenever you apply for a mortgage, the lender will carry out a mortgage valuation report before making you a mortgage offer. Whilst this report is designed to assist a mortgage provider by confirming how much the property is worth, you usually have to pay for the mortgage valuation. However, on certain mortgage deals, a mortgage lender may cover this particular fee for you and it’s worth enquiring about this. 

Missed payment fee

You have to make monthly repayments on your mortgage and if you don’t pay the amount required on the agreed date, there is a chance that you would have to pay a missed payment fee. This fee is also sometimes called a late fee and different mortgage lenders have different rules when it comes to missed repayments. Should you fall behind on your monthly repayments, there is a chance your home could be repossessed too. 

Early redemption fee

If you have a fixed-rate mortgage and decide to repay all of or part of your loan amount before the agreed redemption date, you would likely have to pay an early redemption fee. This fee is also known as an early repayment charge or early redemption charge and you may see it simply referred to as an ERC. Commonly this fee is a percentage of the loan and it could cost you thousands of pounds to repay your mortgage early. It is always important to check what the early redemption fee is before you take out a new mortgage. 

Exit fee

When you close your mortgage account, whether you’re switching mortgage providers or selling your home, you often have to pay an exit fee. This fee is also referred to as a sealing fee, discharge fee or redemption fee and it is charged to cover the administrative process involved with closing an account. An exit fee is usually fairly inexpensive when compared to the other fees mentioned above and it would be written in your mortgage agreement. 

Getting a new mortgage 

All in all, it is fair to say that whenever you take out a mortgage, it is essential to be aware of the costs associated with doing so and you should never accept a mortgage offer without double-checking all of these fees. If you’re currently trying to get a new mortgage and would like some assistance finding the most competitive deal, feel free to get in touch with our team at Mortgage Required. Our experienced team can provide professional advice on all aspects of the mortgage market and we can search the whole market for you, making it much easier to find the best mortgage deal. You can trust you will be in good hands with our mortgage advisors. 

Your home may be repossessed if you do not keep up repayments on your mortgage.

There will be no fee for Mortgage Advice. There may be a fee for arranging a mortgage. The precise amount will depend upon your circumstances, but we estimate it to be £399.

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