You might think the interest rate is the most important thing to consider when you’re choosing a mortgage.

It is crucial, as it determines how much you’ll have to repay each month.

But the interest rate is only part of what determines whether a mortgage is good value or not.

When you’re choosing between deals, you also need to take the fees into account.


What you may already know about fees

Even if you’re buying for the first time, you will hopefully know that most lenders charge a fee when you take out a loan with them.

Some don’t – but, surprisingly, this isn’t always a positive thing.

(To find out why, read The fee-free mortgage.)

You may expect to pay a fee at the end of your loan too.

Unfortunately, these costs are just the tip of the mortgage fee iceberg.

According to recent research, mortgage lenders now have a range of over 50 different charges they can throw at borrowers – that’s more than for any other financial product.

Forewarned, as they say, is forearmed, so here’s what you need to know...

And what you probably don’t realise

Mortgage lenders give their fees all sorts of fancy names, but they tend to boil down to the same basic things.

• Charges at the beginning of a loan

These can be called set-up, booking, reservation, arrangement or administration fees – but lenders are coming up with new titles all the time.

For more on these, see Charges at the start of a mortgage.

• Charges during a loan

You can expect to pay a fee for anything that involves the tiniest bit of work on your lender’s part.

That could be anything from sending out a duplicate statement to chasing you over a missed payment.

For further information, visit Charges during a mortgage.

• Charges at the end of a loan

These can be described as exit, deeds, discharge, redemption or sealing fees, and – at the time of writing – are typically between £200 and £300.

Lenders have come in for a lot of criticism over the way these fees have been rising in recent years.

As a result, several have scrapped them.

However, in some cases they have replaced them with others – new titles to look out for include admin, account, core term and lending charges - or similar.

To find out more, go to What’s happening to mortgage exit fees?