Mortgage fees introduction, Arrangement and Broker fees

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Mortgage fees and costs guide

One aspect of the mortgage lending and remortgage process that many borrowers remain unaware of is the fees and other costs. Arranging a new mortgage loan, or remortgaging to re-arrange an existing one, attracts a number of different administration and service fees.

Mortgage costs of this type can be levied for a number of reasons, making the overall loan package much less competitive than it initially seemed.

This Mortgages.co.uk section outlines the key mortgages costs and fees attached to a mortgage loan.

In this guide to mortgage fees:

• Arrangement and Broker Fees
• Stamp Duty (including calculator)
• Mortgage Indemnity Premiums
• Valuation and Survey Fees
• Exit and Completion Fees
• Other Mortgages Fees
• Mortgage Fees News

Stamp duty is the cost most mortgage borrowers are aware of. Read our guide to stamp duty, and use our stamp duty calculator to determine how much stamp duty is incurred on a property purchase.

Arrangement fees

Arrangement fees, also known as lender arrangement fees, are one cost that mortgage lenders have greatly increased in recent years. To secure the most competitive deals, whether they are for fixed-rate mortgages or discounted mortgages, lenders often attach an arrangement fee. This type of mortgage fee, and the requirements of payment, varies in cost depending on the type of deal sought and the lender themselves. There are several key things to be aware of when it comes to arrangement fees.

Firstly, the mortgage lender may ask for payment of the fee upon receipt of the application, to cover administration costs. This means that the fee may not be refunded, even if the mortgage does not proceed. Other lenders will add this fee to the cost of the mortgage, but borrowers need to be aware that in this instance they may be charged interest throughout the mortgage. All borrowers need to establish from the outset exactly what the arrangement fee costs, and how the repayment works.

Due to best buy tables and the need for lenders to make the cost of their mortgages competitive in the market, a low interest rate or low redemption fees and penalties can be offset by a large arrangement fee.

Broker Fees

Borrowers who use mortgage brokers to find the most suitable mortgage loan on the market may face a broker fee. The stage at which this repayment is due depends on the mortgage broker. For instance, some brokers charge a fee whether a mortgage is secured or not. Borrowers need to be aware of up front fees and costs, and should always clearly understand the terms and conditions. Many brokers get a commission from lenders (known as a procuration fee), and this can offset the fee for broker services. Brokers are required by law to disclose all fees.

Depending on the type of mortgage loan you are looking for, broker fees may be perfectly suitable. For instance, those people looking for poor credit mortgages, or those who have particular requirements that are difficult to arrange, may be asked to pay a broker fee. As a borrower, it is worth remembering that the mortgage broker market is extremely competitive, and shopping around may find you a better deal. Some specialist brokers, who can secure special deals otherwise unavailable, may charge high rates.

Next: Mortgage Indemnity Premiums >>