Arrangement fee

It is a fee charged by bank for arranging a loan on completion. Arrangement fee can vary. It can be anything from £500 to 3% of your loan.

There are two ways arrangement fee can be paid: either upfront or added to your loan. If you can you should try to pay it upfront (that is before completion). Why? Because if you add it to your loan it will increase the loan amount and you will have to pay interest rate on it. You will pay much more than you would pay upfront.

Realistically not many mortgage applicants can afford to pay arrangement fee just before completion.

Summary:

When to pay? Just before completion or add it to your loan.

How much? Anything from £500 to 3% of a loan value (can be added to the loan value).

Booking fee

It is charged by bank on a mortgage application. It is important to remember that this fee is non-refundable. If for some reason your mortgage does not go ahead you will lose this money.

Booking fee vary but usually it’s something between £500 and £1000. Like with other fees it can be added to the loan value (and usually is).

Summary:

When to pay? On mortgage application.

How much? Anything from £500 to £1000 (can be added to the loan value).

 

Valuation fee

If you are the first time buyer or remortgage your property you may expect not being charge the valuation fee. It is a fee charged by bank for a basic inspection of the property you want to take loan on.

Summary:

When to pay?.

How much? £200 to £800 (usually free for first time buyers).

 

Valuation Administration Fee

Most of the lenders do not charge this fee. It is a fee for any admin work done on processing the mortgage valuation. It usually doesn’t exceed £100. It needs to be paid upfront and is not refundable.

 

Summary:

How much? Anything between £50 and £100.

 

Higher Lending Charge

If you loan is higher than 90% of home value it will be considered high-loan-to-value. High-loan-to-value mortgage represents greater risk to the bank. To minimise risk in case of mortgage default banks buy so called Mortgage Indemnity Guarantee. Naturally the cost of MIG is covered by you – in form of Higher Lending Charge. Higher Lending Charge is rarely charged. You have an option not to pay. If you pay it it can be add to the loan or paid upfront.

Summary:

How much? Usually around £2000 (can be added to the loan or paid upfront)

 

 

 

Mortgage account fee

In short – it is a charge for running your mortgage account.

Summary:

When to pay? Usually on completion. Sometimes charged UPFRONT.

How much? £100 – £300.

Mortgage Application Processing Fee

This non-refundable fee is, as it name states, charged for processing your mortgage application.

Summary:

How much?

Lenders Conveyancing Fee

While you have to pay your own conveyancing fees to solicitor of your choice – lender will charge you for paying their conveyancing fee to their solicitors. This is unfair – but the trend is for lenders to put most of the cost on customers.

Summary:

When to pay? On completion.

How much: £100 – £300

 

Earlier Repayments Charges (also known as Redemption Penalty)

Redemption Penalty is activated when you decide to sell or remortgage property during your fixed, discounted or

Summary:

When to pay? When you remortgage or pay off mortgage during your initial period if you have introductory fixed, discounted or tracker deal.

How much? 0.5% to 7% of a mortgage loan.

 

Redemption Charge or Redemption Administration Fee

 

Summary

When to pay? It is charged upon closing a mortgage account.

How much? Around £100