Cost of a mortgage: Mortgage fees and charges explained
, by Matt Stevens
When buying a property, there are various mortgage fees and charges you will be required to pay at different stages of the purchasing process. These can range from small admin fees to larger charges that will cover essential services, and they’ll all have an impact on the true cost of a mortgage. So, it’s vital you’re aware of everything you’ll be expected to pay for so you can plan your finances accordingly.
In this guide, we’re going to outline all of the different mortgages fees and costs you’ll typically need to cover when buying a home. We’ll explain exactly what you’ll be paying for, who the money will go to, and approximately how much you can expect to pay.
We’ll cover:
- Mortgage fees and charges before completion
- Mortgage fees and charges after completion
- Government fees and charges
- How do fees and charges affect your mortgage deal?
Please note that the costs included in this guide are estimated and they can vary significantly depending on your lender and the services you require. So, to get an accurate idea of how much your mortgage will cost, you will need to contact your chosen lender and service providers directly.
Read on to find out more.
Mortgage fees and charges before completion
You will typically be required to pay a range of mortgage fees and charges before completion. Many of these will be paid to your chosen lender, but you will also pay your surveyor, solicitor, and mortgage broker fees at this stage.
To help you budget, let’s take a look at the main cost of a mortgage homebuyers have to cover before completion.
Mortgage deposit
In order to buy a property, you will need to pay a mortgage deposit. If you’re a first-time buyer, there are a number of government-backed schemes, such as shared ownership, that are designed to support you with purchasing your first home.
You’ll need at least a 5% deposit to secure a home through the mortgage guarantee scheme, which is open until 30 June 2025, or at least 10% for a standard mortgage.
Who is it paid to? The seller of the property you’re buying, typically via your solicitor.
When is it paid? On exchange of contracts.
How much? At least 5% of the property value.
Do I always need to pay this? While 100% mortgages that don’t require a deposit do exist, they’re very rare and will require a guarantor. The vast majority of homebuyers are required to pay a deposit.
Mortgage arrangement fee
A mortgage arrangement fee — sometimes known as a mortgage product fee or completion fee — is the main fee your lender will charge for arranging your loan. It’s a cost that’s associated with many mortgage products.
This is a significant cost that you will need to factor into your mortgage affordability calculations to ensure you choose the right product for your needs and budget.
Your arrangement fee will usually be linked to the interest rate on your offer. Mortgage products with a low-interest rate typically come with a higher fee and vice versa. If you’re taking out a large loan, paying a higher mortgage arrangement fee to access a lower interest rate tends to be worthwhile in the long run.
You will also need to decide how you wish to pay your fee — you can either do this upfront or add the cost to your mortgage. Paying upfront is the most cost-effective approach as you won’t have to pay interest on the arrangement fee amount, but you should keep in mind that this could mean you risk losing all or some of the fee if your application falls through. If your mortgage overpayment terms are reasonable, adding the fee to your loan and then overpaying this amount as soon as you’ve secured your mortgage could give you the best of both worlds.
Who is it paid to? Your lender.
When is it paid? Once you’ve accepted a mortgage offer (it may be added to your mortgage balance).
How much? £0–£2,500
Do I always need to pay this? Yes.
Mortgage booking fee
If you’re applying for a fixed-rate, tracker, or discount mortgage, your lender is likely to charge you a booking fee to ‘lock in’ the deal. We have a guide to the different mortgage types that will help you to decide whether these products are going to work for you.
Sometimes also known as a reservation or mortgage application fee, this is usually payable as soon as you submit your application and isn’t refundable should your application fall through. Some lenders will include it as part of the arrangement fee, though this can depend on the size of your mortgage loan.
Who is it paid to? Your lender.
When is it paid? Upon application.
How much? £100–£250
Do I always need to pay this? Possibly. It depends on the type of mortgage applied for.
Mortgage valuation fee
Your mortgage valuation fee — sometimes known as your mortgage survey fee — will cover the cost of your lender valuing the property you wish to buy. This is to ensure the property hasn’t been overpriced, so their loan is suitably secured and they won’t make a loss if they have to repossess it. Some lenders may charge an additional valuation administration fee to cover the process of arranging the survey, while others may waive any fees as part of the mortgage deal on offer.
It’s important to note that this valuation is different to the property survey you can have carried out on your own behalf: the valuation survey checks the home’s value only for the lender and won’t assess potential problems or costs you may face.
In Scotland, the seller needs to provide a Home Report, which includes a valuation of the property. Should the Report be less than 12 weeks old, the lender may agree to use this figure and forgo a new valuation — you can find out more in the Scottish Government’s guidance.
Who is it paid to? Your lender.
When is it paid? When you apply, at the same time as your booking fee and arrangement fee (if applicable).
How much? £250–1,500, depending on the property value.
Do I always need to pay this? Yes, unless it’s offered for free or you’re buying property in Scotland with an up-to-date Home Report.
Mortgage account fee
A mortgage account fee is often charged by a lender to cover the cost of creating, maintaining, and closing your mortgage account.
If your loan provider adds this fee to your application, it means that you won’t need to pay an exit fee later, but you may still be charged an early repayment charge if you settle the balance ahead of schedule. How and when you pay this fee also depends on the lender: most will add it to your mortgage balance, but some may give you the option of paying it upfront.
Who is it paid to? Your lender.
When is it paid? Once you’ve accepted a mortgage offer (it may be added to your mortgage balance).
How much? £100–£300
Do I always need to pay this? This depends on the lender.
Telegraphic transfer fee
The telegraphic transfer fee, often known as the CHAPS (Clearing House Automated Payment System) fee, covers the cost of your mortgage lender transferring the mortgage funds to the seller’s solicitor. The fee is usually paid once you’re ready to complete the deal and is commonly added to the mortgage amount or taken off the balance received.
It’s worth noting that this fee is typically non-refundable so, if your deal falls through after it’s paid, it’s unlikely you will get this money back.
Who is it paid to? Your lender.
When is it paid? Upon completion, when funds are transferred from the lender.
How much? £25–£50
Do I always need to pay this? Yes.
Own building insurance fee
An own building insurance fee, often known as a freedom of agency fee, may be charged by your lender if you decide to forgo their building insurance and instead choose a policy from another provider. It covers the cost of checking whether this alternative policy is comprehensive enough to protect the lender if the property you’re buying suffers damage.
Not all lenders will charge this fee but, if they do, you will only need to pay it if you want to choose your own buildings insurance. It’s worth considering whether it will be more cost-effective to pay the fee and find a better deal elsewhere, or to simply go with your loan provider’s cover.
If you’re looking to find the best deal on your home insurance, The Mortgage Genie can help you find alternatives to the policy offered by your lender. Our team is ready to provide expert advice and make the application process simple.
Who is it paid to? Your lender.
When is it paid? Once you’ve accepted a mortgage offer.
How much? £25–50
Do I always need to pay this? This depends on the lender and whether you take out their insurance.
Mortgage broker fee
A mortgage broker fee may be payable if you hire a mortgage broker to find you the best deal on your loan. If you’re unsure about the mortgage market and how to secure the right deal for you, a broker can help to find the most suitable product and support you through your application. You can find out more about this in our mortgage broker guide.
Whether you pay a mortgage broker fee all depends on whether the broker is ‘fee-free’ or requires upfront payment for their services.
At The Mortgage Genie, we offer total transparency on fees for our mortgage services. After a free consultation, we’ll work out if an upfront fee is necessary or not, agreeing on any charge in advance of your application. This way, you’ll have all the information you need to make smart budgeting choices as you move.
Who is it paid to? Your mortgage broker.
When is it paid? This depends on the mortgage broker — it can be upfront or when you accept a deal.
Mortgage broker cost: £0–£500, depending on the mortgage broker.
Do I always need to pay this? Hiring a mortgage broker is optional. It also depends on whether the mortgage broker is ‘fee-free’ or charges upfront.
House survey fee
A house survey fee will be payable if you choose to have a survey carried out on the property you’re thinking of buying. There are three levels of survey and they get more expensive as they increase in detail — you can find out more in this guide from the Royal Institute of Chartered Surveyors. Paying this fee will see a surveyor visit the property and inspect it in detail to find any issues or potential problems you may encounter down the line — this differs from your mortgage valuation fee, which pays for a check on behalf of the lender that ensures the property is worthy of a mortgage.
Having a survey done is completely optional, though it will give you peace of mind that you’re purchasing a property in good condition. It can also pay off if any issues, such as damp or structural problems, are found, as these can give you room to renegotiate the asking price.
Who is it paid to? Your surveyor (or lender if they arrange it).
When is it paid? Between the property being taken off the market and the contracts being exchanged.
How much? £400–£2,000 depending on the level of survey.
Do I always need to pay this? No, a survey is optional (but recommended).
Conveyancing fees
When buying a home, you will need to hire a solicitor to take care of all the legal work associated with the process, and they will charge fees for this. Usually, a solicitor will require payment for each service as they perform it, so expect to pay various fees throughout the process.
Your solicitor will take care of several key matters. This includes conveyancing, which involves managing the transfer of ownership from the previous owners to yourself, as well as checking all paperwork is present and correct and finding out whether there are any potential issues, such as planning restrictions or environmental problems.
Some loan providers will offer to cover the conveyancing and legal fees, especially for remortgages, usually by providing the services of their own associated solicitor or by offering remuneration after you’ve closed the deal.
Your solicitor may also conduct legal work on behalf of your lender, so you need to check that they’ll accept your choice before making any agreements or payments. Lenders usually have a panel of approved solicitors that you can consult, although it’s worth asking if you want to engage a third party.
Who is it paid to? Your solicitor.
When is it paid? Upfront at various stages of the mortgage application process.
How much? £400–£1,500
Do I always need to pay this? Usually yes, but some lenders offer this as part of the package.
Higher lending charge
A higher lending charge, formerly known as a mortgage indemnity guarantee (MIG), could be required if you have a small deposit, as this will pay for your lender’s insurance if you can’t pay back your mortgage and they have to sell your property at a loss.
Not all lenders charge this but, if they do, they can choose the borrowing threshold they wish to set for higher lending charges. For instance, some may impose this extra charge on homebuyers who need to borrow more than 85% or 90% of a property’s value.
Who is it paid to? Your lender.
When is it paid? Once you’ve accepted a mortgage offer.
How much? Usually 1.5% of your mortgage.
Do I always need to pay this? This will depend on the lender.
Mortgage fees and charges after completion
Even after you’ve completed your home purchase and secured your mortgage, there may still be fees and charges to cover throughout the lifetime of your deal which make up the total cost of a mortgage. Some are avoidable, while others will be non-negotiable.
Here are the main additional costs you need to be aware of.
Missed mortgage payment fee
If you miss a repayment during the course of your mortgage, your lender could charge you a missed mortgage payment fee, or mortgage late fee. Typically, this fee will be applied to the balance of your missed payment after a period of grace.
Should you face difficulties repaying your mortgage, you should always let your mortgage provider know, as they may be able to work with you to get things back on track. Sometimes it’s possible to put a reduced payment plan or repayment holiday in place to help you manage your finances, so be sure to get in touch with your lender if you’re facing financial difficulties.
Who is it paid to? Your lender.
When is it paid? If your mortgage account falls into arrears.
How much? This depends on the lender.
Do I always need to pay this? Only if you miss a repayment, though some lenders don’t use them.
Early repayment charge for mortgage (ERC)
If you make a significant overpayment on your mortgage, exit a minimum term deal, or switch lender, you may be subject to a mortgage early repayment charge (ERC) to ensure the lender doesn’t suffer a loss.
The charge is typically 1–5% of the early repayment, though this may depend on any introductory deals and the size of the mortgage. If you repay your mortgage very early, you may even need to pay back incentives like any legal fees covered or cashback you received from your lender.
Most providers have a mortgage overpayment limit that allows you to repay a limited portion of your mortgage every year without incurring a fee, so it is still possible to overpay some of your mortgage without incurring any additional charges.
Additionally, all lenders have an early mortgage repayment fee period, which usually stretches up to when an introductory deal ends or covers a certain length of time after you completed on your loan — after this date, you will be able to repay as much of your mortgage as you like without an ERC.
Who is it paid to? Your lender.
When is it paid? When you pay off all or some of your mortgage early, exit an introductory deal, or wish to switch lenders.
How much? This depends on the lender, but typically 1–5% of the value of the early repayment.
Do I always need to pay this? Yes, if you repay early, though some lenders don’t use these charges.
Mortgage redemption fee
Your mortgage lender may charge you a redemption fee — sometimes known as a mortgage exit fee, deeds release fee, or mortgage completion fee — for closing your account with them.
This can be payable when you remortgage to another lender or switch to another deal with the same lender, as well as when you finish repaying your mortgage — even when you aren’t repaying early. If you are repaying early or remortgaging, this fee will typically be added to the redemption figure you’re quoted, which could also include an early repayment charge.
It’s worth noting that if you’ve paid a mortgage account fee during your application, you will have already paid the necessary charge for closing your account, so a mortgage redemption charge won’t be incurred.
Who is it paid to? Your lender.
When is it paid? When you close your mortgage account.
How much? £50–£300
Do I always need to pay this? No, you may have already paid a mortgage account fee that covers the cost of closing your account.
Government fees and charges
Along with the fees you’ll need to pay to your mortgage lender and the service providers you hire to help you throughout the home buying process, you’ll also need to budget for government fees and taxes associated with buying a property.
Here are the most common costs you’ll need to keep in mind.
Land Registry fee
When you complete the purchase of your new home, you need to pay a Land Registry fee to the HM Land Registry, the department of the Government that registers the ownership of land and property in the UK. This fee is mandatory, as it will provide you with proof that you own the house in a title guarantee. Your solicitor will use your funds to pay this as a disbursement on your behalf.
You can find out what the latest Land Registry fees are on the Government’s website.
Who is it paid to? HM Land Registry.
When is it paid? Upon completion.
How much? Up to £500 depending on property price.
Do I always need to pay this? Yes.
Stamp Duty Land Tax
Stamp Duty Land Tax (SDLT) is the tax that you pay to HM Revenue & Customs when you purchase a new home. You will pay your solicitor the required amount, then your solicitor will pay the Tax to HMRC on your behalf. You can find out more about this in our Stamp Duty Land Tax guide.
You’ll only need to pay Stamp Duty if the home you’re buying is worth more than £125,000 or £500,000 if you’re a first-time buyer.
Who is it paid to? HM Revenue & Customs.
When is it paid? Upon completion.
How much? This depends on the property price and your circumstances. HMRC has a Stamp Duty calculator you can use to work out how much you’re likely to pay.
Do I always need to pay this? It depends on the price of the property you’re buying. There’s no charge on properties in the lowest price bracket set by HMRC — the threshold is currently £125,000. First-time buyers also don’t pay Stamp Duty on properties worth less than £500,000.
Applying for and securing a mortgage requires a lot of budgeting to ensure you can comfortably afford your upcoming move. This guide has introduced you to the most common fees you’ll typically encounter before and after completion so you can set your expectations and plan accordingly.
How do fees and charges affect your mortgage deal?
As a prospective homebuyer, you’re likely already aware that weighing up the interest rates of the mortgage deals available to you is incredibly important. But the mortgage fees and charges you’ll incur during and after the house buying process can also have a huge impact on the cost of the mortgage overall. So, you need to pay attention to what different lenders charge and which payment options they provide, too.
It’s becoming increasingly common for mortgage lenders to offer competitive low-interest rates to climb to the top of comparison site leaderboards, only to hit their borrowers with high fees that affect the overall cost of a mortgage. So, you need to ensure you consider all of the relevant factors when looking for the best mortgage deal — getting a low interest rate is important, but it shouldn’t be the only detail you keep in mind when shopping around.
For example, if you’re taking out a £200,000 mortgage with an interest rate of 1.49% that comes with fees of £2,000, this will cost you more than a fee-free mortgage with an interest rate of 1.55% in the long run. Hiring a good mortgage broker will help you take everything into account and do all of the necessary calculations to find the best offer you can get.
If you would like some help with finding the best mortgage deal and navigating the application process, our mortgage brokers are here to support you. We’re well-versed in helping first-time buyers, people who want to remortgage, and even those who need a bad credit mortgage to take the next step
You can use our mortgage calculator to get an idea of what you’ll be able to afford and get in touch with our team to discuss your plans.
