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 mortgage 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:
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.
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
What is it? A mortgage deposit is an upfront payment to secure your property. 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.
Who is it paid to? The seller of the property, usually via your solicitor.
When is it paid? At the exchange of contracts.
How much? At least 5% of the property's value through the mortgage guarantee scheme, which is open until 30 June 2025, or at least 10% for a standard mortgage.
Is it always required? Yes, except for rare 100% mortgages which require a guarantor.
Mortgage arrangement fee
What is it? A mortgage arrangement fee, sometimes known as a mortgage product fee or completion fee, is the fee charged by your lender for arranging your mortgage loan. Your arrangement fee is usually linked to your mortgage interest rate; lower rates often come with higher fees and vice versa.
Who is it paid to? Your lender.
When is it paid? Once you’ve accepted a mortgage offer; it can be added to the mortgage balance or paid upfront. Paying upfront is more cost-effective but risks losing the fee if your application fails.
How much? Up to 1% of the mortgage value.
Is it always required? Yes.
Mortgage booking fee
What is it? A fee to lock in your mortgage deal, also known as a reservation or application fee. This fee is non-refundable if your application fails. Some lenders may include it in the arrangement fee, depending on your loan size. For fixed-rate, tracker, or discount mortgages, a booking fee is likely charged to secure the deal.
Who is it paid to? Your lender.
When is it paid? Upon application submission.
How much? £100–£300.
Is it always required? It depends on the type of mortgage applied for.
Mortgage valuation fee
What is it? A fee for the lender's valuation of the property to ensure it's appropriately priced. Some lenders may charge an additional administration fee, while others may waive it as part of the mortgage deal. This valuation is different from a property survey you might commission, as it only assesses the home's value for the lender.
Who is it paid to? Your lender.
When is it paid? When you apply, alongside the booking and arrangement fees if applicable.
How much? £250–£1,500, depending on property value.
Is it always required? Yes, unless offered for free or you're buying property in Scotland with an up-to-date Home Report. More details are available in the Scottish Government’s guidance.
Mortgage account fee
What is it? A fee for creating, maintaining, and closing your mortgage account. If this fee is added to your application, you won't need to pay an exit fee later, but early repayment charges may still apply if you settle early.
Who is it paid to? Your lender.
When is it paid? Once you’ve accepted a mortgage offer; it may be added to the mortgage balance, though some offer the option to pay it upfront.
How much? £100–£300.
Is it always required? It depends on the lender.
Telegraphic transfer fee
What is it? A fee for transferring mortgage funds to the seller’s solicitor, often called a CHAPS fee. The fee is usually added to the mortgage amount or deducted from the balance. It is typically non-refundable, so if the deal falls through, you likely won't get a refund.
Who is it paid to? Your lender.
When is it paid? Upon completion, when funds are transferred.
How much? £25–£50.
Is it always required? Yes.
Own building insurance fee
What is it? A fee for choosing your own building insurance instead of the lender’s policy. Often known as a freedom of agency fee, this fee covers the cost of verifying the alternative policy's adequacy, but not all lenders will charge it. Consider whether paying the fee for potentially better coverage is more cost-effective than using the lender's policy.
The Mortgage Genie can help you find alternatives to your lender's policy and provide expert advice on home insurance.
Who is it paid to? Your lender.
When is it paid? Once you’ve accepted a mortgage offer.
How much? £25–£50.
Is it always required? Only if you opt for an external insurance policy.
Mortgage broker fee
What is it? A fee for hiring a mortgage broker to find the best loan deal for you and guide you through the application process. Fee structures vary here; some brokers are fee-free, while others charge upfront. You can find out more about this in our mortgage broker guide.
At The Mortgage Genie, we provide transparent fee information. After a free consultation, we’ll determine if an upfront fee is needed, agreeing on any charges beforehand to help with your budgeting.
Who is it paid to? Your mortgage broker.
When is it paid? It depends on the broker; it can be upfront or upon acceptance of a deal.
How much? £0–£500, or a commission based on the mortgage value.
Is it always required? Optional, depending on whether the broker charges upfront.
House survey fee
What is it? A fee for an in-depth survey of the property to identify potential issues. There are three survey levels, increasing in cost with detail—more information is available from the Royal Institute of Chartered Surveyors. This fee is unlike the mortgage valuation fee, which ensures the property’s value for the lender.
Who is it paid to? Your surveyor (or lender if they arrange it).
When is it paid? Between taking the property off the market and exchanging contracts.
How much? £400–£2,000, depending on the survey level.
Is it always required? Optional but recommended.
Conveyancing fees
What is it? Fees for the legal work your solicitor undertakes during the home buying process. Some lenders may cover conveyancing and legal fees. Confirm your solicitor is acceptable to your lender, as they usually have a panel of approved solicitors, but you may ask to use a third party if desired.
Who is it paid to? Your solicitor.
When is it paid? Upfront at various stages of the mortgage application process.
How much? £500–£1,500.
Is it always required? Usually yes, but some lenders offer it as part of their package, often through their own solicitors or by offering reimbursement after closing.
Higher lending charge
What is it? A charge for insuring the lender if you have a small deposit and they incur a loss. Formerly known as a mortgage indemnity guarantee (MIG), this covers the lender's insurance if you default and they sell the property at a loss. Not all lenders charge this.
Who is it paid to? Your lender.
When is it paid? Once you’ve accepted a mortgage offer.
How much? Usually 6-8% of the excess mortgage amount.
Is it always required? It depends on the lender and the borrowing threshold they set for higher lending charges, often applying it to loans above 85% or 90% of the property’s value
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
What is it? A fee charged by your lender if you miss a mortgage repayment. This is usually added to the balance of the missed payment after a grace period. If you’re struggling to make repayments, contact your lender immediately. They might offer options like a reduced payment plan or repayment holiday to help manage your finances.
Who is it paid to? Your lender.
When is it paid? If your mortgage account falls into arrears.
How much? 3-6% of your regular monthly payment.
Is it always required? Only if you miss a repayment, though some lenders may not charge this fee.
Early repayment charge for mortgage (ERC)
What is it? A charge applied if you repay your mortgage early, exit an introductory deal, or switch lenders. It compensates the lender for potential lost interest. This fee may also include repayment of any received incentives like legal fees or cashback. Most lenders allow a limited annual overpayment without fees, and you can usually repay in full without an ERC after the introductory deal ends or a set period.
Who is it paid to? Your lender.
When is it paid? When you pay off all or part of your mortgage early, exit an introductory deal, or switch lenders.
How much? Typically between 1-5% of the early repayment amount, depending on the lender and any introductory deals.
Is it always required? Yes, if you repay early, though some lenders may not apply this charge. Note that most providers allow for some overpayments without incurring a fee.
Mortgage redemption fee
What is it? A fee for closing your mortgage account, sometimes called a mortgage exit fee, deeds release fee, or mortgage completion fee. This fee, often added to the redemption amount, may also include an early repayment charge and applies whether you remortgage, switch deals, or finish repaying your mortgage.
Who is it paid to? Your lender.
When is it paid? When you close your mortgage account, either by remortgaging, switching deals, or fully repaying your mortgage.
How much? Between 1-4% of your outstanding mortgage loan.
Is it always required? Not necessarily; if you’ve paid a mortgage account fee during your application, this may cover 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
What is it? A fee paid to HM Land Registry to register the ownership of your property, providing official proof of ownership. Your solicitor will usually handle this payment on your behalf as a disbursement. You can check the latest Land Registry fees on the Government’s website.
Who is it paid to? HM Land Registry.
When is it paid? Upon completion of the property purchase.
How much? £20–£500, depending on the property price.
Is it always required? Yes.
Stamp Duty Land Tax
What is it? A tax paid to HM Revenue & Customs (HMRC) when you buy a property, based on the property’s purchase price. You will pay your solicitor the required amount, then your solicitor will pay the Stamp Duty Land Tax to HMRC on your behalf.
Who is it paid to? HMRC.
When is it paid? Upon completion of the property purchase.
How much? The amount depends on the property's price and your specific circumstances. For a precise calculation, you can use the Stamp Duty calculator available on the HMRC website.
Is it always required? It depends on the property’s price:
Standard rate: You only pay Stamp Duty if the property’s price is over £250,000.
First-time buyers: You don’t pay Stamp Duty on properties up to £425,000. There are reduced rates for properties priced between £425,000 and £625,000.
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?
While interest rates are crucial when choosing a mortgage, the fees and charges associated with a loan can significantly impact the overall cost. Lenders often lure borrowers with low rates but high fees, so it's essential to consider both when comparing deals.
For instance, a £200,000 mortgage with a 1.49% interest rate and £2,000 in fees might be more expensive overall than a mortgage with a 1.55% rate but no fees. A good mortgage broker can help evaluate these factors and find the best offer for you.
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.
