What fees to expect when buying a mortgage

Buying a home is one of the most significant financial commitments many people will make in their lifetime. So when securing a mortgage to finance your dream home, it's essential to be aware of the various fees associated with the process.

Understanding these fees can help you plan your budget more effectively and avoid any surprises along the way.

In this article, we'll break down the common fees you can expect when buying a mortgage.

1. Mortgage arrangement fee: The mortgage arrangement fee, also known as the product fee, is charged by the lender for setting up your mortgage. It can be a flat fee or a percentage of the loan amount and typically ranges from £1,000 to £2,000. Some lenders offer mortgage products with no arrangement fees, but these may come with slightly higher interest rates.
   
   
2. Booking fee: This is a cost that can be applied when you formally apply for your mortgage. It can range between £99 and £250 on average. Some lenders will add this to the arrangement fee.
   
   
3. Valuation fee: Your lender will require a valuation of the property to assess its market value. The cost of a valuation fee varies depending on the property's value but typically ranges from £150 to £1,500. Some lenders offer free or discounted valuations as part of their mortgage deals.
   
   
4. Survey fee: While not mandatory, it's advisable to have a more detailed survey conducted to identify any potential issues with the property. Survey fees vary depending on the type of survey you choose, but a basic homebuyer's report may cost around £400 to £600, while a full structural survey can cost between £600 and £1,200.
   
   
5. Legal fees: You'll need a solicitor or conveyancer to handle the legal aspects of your property purchase. Legal fees typically range from £500 to £1,500. These fees cover tasks such as property searches, land registry fees, and the legal paperwork required to complete the transaction.
   
   
6. Stamp Duty Land Tax (SDLT): SDLT is a government tax imposed on property purchases above a certain threshold. The threshold and rates may change over time, so it's essential to check the current rates before buying. Current rates can be found here. There are some exemptions, notably for first-time buyers who pay no stamp duty on properties bought for up to £425,000.
   
   
7. Broker fees: If you use a mortgage adviser to help you find the right mortgage deal (which of course we’d advise!) they may charge a fee for their services. Broker fees can vary but are typically around 1% of the mortgage amount or a fixed fee of £500 to £1,000.
   
   
8. Mortgage exit fees: Some mortgages may have exit fees, also known as early repayment charges. These fees apply if you decide to pay off your mortgage or switch to a new lender before a specified period ends. The amount of the fee depends on your mortgage terms and can range from a few hundred pounds to several thousand.
   

In conclusion, buying a mortgage involves various fees, and it's essential to be aware of these costs to plan your budget effectively. The specific fees can vary depending on your lender, the type of mortgage you choose, and the property you're purchasing.

To make informed decisions, it's advisable to compare mortgage offers from different lenders, understand the terms and conditions, and work with professionals such as us who can guide you through the process.

By being well-informed and prepared, you can navigate the UK mortgage market with confidence and achieve your homeownership goals.

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You can book an online meeting with one of our advisers at your convenience here.

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