“Open” Costs of Getting a Mortgage vs Hidden Costs
There are almost always going to be some fees at the beginning of a mortgage. These fees and their descriptions vary widely between mortgage lenders, but they’re “expected” and thereefore we’ll call them “open”. However there are sometimes a few charges – the “hidden” ones – you don’t expect.
Bear in mind that not all lenders charge all of these fees, but many do. Here is our list of the fees you might have to pay before you even move in:
Set up Fees / Arrangement Fees, Booking or Reservation Fees
Arrangement fees, booking fees and reservation fees are all the same thing, and are charged by virtually all lenders when they allocate the money for your loan, guaranteeing your mortgage deal.
It is hard to indicate typical costs for these as they vary depending on the mortgage lenders. Some lenders may be running offers where these costs have been discounted.
The current average is nearly £800.
Most deals now come with a fee of at least £500, and although cheaper ones are available, they may not be competitive in other ways.
Some lenders ask as much as £2000 ! (Sorry. Only £1,999)
Higher Lending Charges
Higher Lending Charges (HLC) are applied by some lenders to borrowers seeking a loan of more than 90% of the value of their property. They can be very pricey indeed, so make sure you understand if they will apply to you or not.
This can also be called an indemnity guarantee, additional security fee or mortgage advance premium.
Read more about Higher Lending Fees
If you are buying a new property, you may only need your lender’s mortgage valuation report, but even this can have a fee associated with it. Read more about Valuation and Survey Costs
Homebuyer’s Report / Survey Costs
If you are buying an older property, you will certainly want at least a Homebuyers Report (a basic survey), or even a full structural survey for very old or run-down properties. Read more on Homebuying valuations and surveys.
The legal process of buying a property is called conveyancing. This could cost you about £350 plus VAT for a £100,000 purchase
Add to this the legal Search fees (c £100), Land Registry fees (c £100)
You will also usually have to pay the legal and telegraphic transfer costs directly to your solicitor, unless your bank or building society has arranged a solicitor for you. These depend on the purchase price ie the amount of money to transfer. For a £200,000 sale it would be about £25.Read more about the legal costs of mortgages and home buying