When you’re comparing mortgages, it’s essential to consider the fees as well as the interest rate.
Most people are at least vaguely aware they will face a set-up charge at the beginning of their loan term and some kind of exit fee at the end.
What would-be borrowers tend to be less aware of is the huge range of fees mortgage lenders can clobber them with during their mortgage term.
As a general rule, they will apply these whenever you do anything that causes them extra work – however slight.
So here’s what you need to know
What Can My Lender Charge Me For?
The short answer is ‘just about anything’. But these fees fall into three broad categories:
Fees for Making a Change
You are likely to be charged an admin fee every time you put your lender to any trouble.
For something small, like asking for a copy of your title documents, you might pay up to £75.
If you want to make a significant change such as adding or removing someone’s name from the mortgage, or changing from an interest-only to a repayment loan, expect to be charged several hundred pounds.
Fees for Missing a Payment
If you fail to make your monthly payment on time, some lenders will give you a few weeks’ grace.
But an increasing number will be ready to penalise you.
You might be charged around £30 for a returned cheque or direct debit, with a similar fee every time they phone or write to you about your arrears – although this can be as much as £50 a time.
Penalties like these can soon mount up, so if you think you might have trouble keeping up with your repayments, contact your lender right away.
If you’ve had a good payment record so far, it may agree to waive the charges.
Fees to Get Out Early
Virtually all lenders apply an early redemption charge if you want to get out of a deal during the initial discounted or fixed-rate period.
This could be £7,500 or more on a £150,000 loan.
To find out more about these, see Early redemption penalties explained