What are all these fees for?

Mortgage Guide Contents

What are all these fees for?

Mortgage lenders charge a whole raft of fees. Here's what you need to know

• Set-up fee

Also called an arrangement or reservation fee.

What is it? It's supposed to cover your lender's admin costs, but it's mostly profit.

How much is it? Anything from a couple of hundred to several thousand pounds. Around £600 is typical.

Can I avoid it? Probably not. Fee-free deals do exist, but they often come with a higher interest rate, making them poor value.

• Higher-lending fee

Also called an indemnity guarantee, additional security fee or mortgage advance premium.

What is it? If you borrow a high proportion of your property's value, the lender uses this to pay for insurance to cover it if you can't keep up the repayments. For more on this, read Higher-lending fees explained.

How much is it? Depends on the value of your property and how much you want to borrow. Between £1,200 and £1,500 is typical. For more on this, read How higher-lending fees are worked out.

Can I avoid it? Yes. To find out how, read How to avoid paying a higher-lending fee.

• Early redemption penalty

What is it? you'll face this if you want to get out of a fixed or discount interest deal before the agreed date. For more on this, read Early redemption penalties explained.

How much is it? Could be several months interest or a percentage of your loan. Either way, it could cost you several thousand pounds.

Can I avoid it? Yes. To find out how, read How to avoid paying an early redemption penalty.

• Exit fee

Also called a deeds, discharge, redemption or sealing fee.

What is it? It's meant to cover the admin costs when you clear your loan, but it's partly profit.

How much is it? From £90 to £295. Around £250 is typical.

Can I avoid it? Unfortunately not, so check the amount at the outset.

To learn more about interest rates, read our sections on

• repayment and interest-only mortgages, and
• variable, fixed and capped interest rates.

To read more on this subject please see the list below or your mortgage guide or your home buying guide

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