Mortgage and lender fees
Product and lender fees can range from £0 to £2,000+.
What changes this cost
- Fee-free products may carry higher rates; fee-bearing products can still be cheaper overall.
- Broker fees and valuation requirements can add to lender-side spend.
- Timing and product switches can change all-in costs close to completion.
Understanding mortgage and lender fees
Mortgage and lender fees are the charges that come with arranging the loan itself, separate from your deposit and the property price. They can range from nothing to more than £2,000, and the headline interest rate does not tell the whole story: a low rate with a high fee can work out more expensive than a slightly higher rate with no fee, especially on smaller loans.
The main charges are the arrangement or product fee (often £0 to £1,500, and sometimes up to £2,000 on the lowest rates), a booking or application fee (£0 to £250), and a valuation fee (£0 to £400, though many lenders now include a basic valuation free of charge). If you use a mortgage broker, some charge a fee of a few hundred pounds while others are paid by the lender. On completion you may also see a telegraphic transfer or CHAPS fee of £25 to £50 to send the funds.
Whether to pay a fee upfront or add it to the loan is a real decision. Adding the arrangement fee to the mortgage spreads it out but means you pay interest on it for the whole term, so a £999 fee can cost far more over 25 years. Paying it upfront avoids that but ties up cash you may need for the move. On a large loan the rate matters most; on a small loan the fee matters more.
To compare deals fairly, look at the total cost over the initial fixed or tracker period, not just the rate. Add the fees to the interest you would pay over, say, two or five years, and compare like for like. A good broker will run this calculation for you, and lenders must show the overall cost for comparison in their illustrations.
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Frequently asked questions
What fees do you pay on a mortgage?
Common charges are the arrangement or product fee (£0–£1,500 or more), a booking or application fee (£0–£250), a valuation fee (£0–£400), a possible broker fee, and a telegraphic transfer fee of £25–£50 on completion.
Should I add the arrangement fee to my mortgage?
Adding it spreads the cost but means you pay interest on the fee for the whole term, so it can cost far more overall. Paying upfront avoids that but uses cash you may need for moving. On large loans the rate matters more; on small loans the fee matters more.
What is a mortgage valuation fee?
It pays for the lender's basic valuation to confirm the property is worth roughly the loan amount. It ranges from £0 (many lenders now include it) to around £400 for higher-value homes. It is not a survey and does not check the condition of the property.
Do mortgage brokers charge a fee?
Some brokers charge a client fee of a few hundred pounds; others are free to you because they are paid a commission by the lender. Always ask how your broker is paid and whether any fee is refundable if the mortgage does not proceed.
Are fee-free mortgages cheaper?
Not always. Fee-free deals often carry a slightly higher interest rate. On a small loan the saving from no fee usually wins; on a large loan a lower rate with a fee can be cheaper overall. Compare the total cost over the deal period, not just the rate.
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Written and reviewed by James Whitfield and the HomeBuyingCosts editorial team.
Stamp duty, LBTT and LTT figures are checked against GOV.UK, Revenue Scotland and GOV.WALES. We explain every cost of buying a home in plain English, with worked examples. Editorial standards · About us