As the world becomes more and more competitive, lenders are constantly looking to streamline their costs and make it easier and cheaper for the customer to obtain a mortgage. However, some lenders make certain additional charges to compensate, the more unscrupulous of whom do this by making the fees rather less than obvious to all but the most careful scrutiny.

The following fees must sometimes be paid before your mortgage can be completed. You can sometimes add the cost of these fees to your loan, but remember that you will then end up paying interest on them for the entire duration of the mortgage. If you can afford to pay them up front, this is usually better for you.

Application fee
This type of fee is becoming less common than an arrangement fee. You have to pay this fee to the lender up-front, at the time when you are applying for the loan. Some lenders refund the application fee on completion of the mortgage.

This type of fee is usually to be found with the more competitive special deals from lenders. It is likely that these fees are in place in order to try and restrict the number of applicants by only attracting serious buyers.

Booking fee
Booking fees are usually paid to reserve funds on mortgages that have a limited amount of money available, such as loans granted on a first come first served fixed rate. The booking fee is usually a fairly low sum, such as £50 or £70, but is non-refundable and can't normally be added to the mortgage.

Arrangement fees
It is quite common for an arrangement fee to be charged by the lender. Arrangement fees are usually paid on completion of the mortgage and anything from £75 to £400 is fairly common.

As with arrangement fees, this type of fee is most likely to be charged in conjunction with particularly competitive mortgage rates - discounted, fixed and sometimes capped rate mortgage products. It could be the case that the lender is trying to offset some of the long-term cost of offering you such a competitive mortgage rate and you must weigh up which is most important to you, especially if you must pay the fee up-front.

This type of fee can normally be added to the loan. It makes very little noticeable difference to your monthly repayments, but you will be paying interest for the full term of the mortgage, so it will add up eventually.

Administration fee
Sometimes you may be charged an administration fee for not taking a building and contents insurance policy, or some other product offered by the lender. It is difficult to know how much extra administration is caused by your decision not to take a policy, but it must be some compensation to the lender to know that they are at least getting some money back.

Valuation fee
This is a charge for carrying out a valuation of the property on behalf of the lender. Many homebuyers rely on the valuation to act as a survey, but it should be remembered that the valuation is not carried out on behalf of the mortgage applicants, so a more detailed survey is often seen as necessary for peace of mind. Valuation fees usually cost between £150 and £250 and are sometimes refunded, particularly with remortgage products.

Other Charges On Your Mortgage

All mortgage lenders will have a tariff of other charges that you will incur in certain circumstances, which are outlined below, along with an approximate guide to the cost. Not all lenders will make these charges and if they do, they may come under a different name.

Telegraphic transfer fee
This is charged when the mortgage is transferred direct to your Solicitor's bank in readiness for completion of the mortgage.
Approximate cost: £10 - £25

Balance breakdown
This can be charged for a month-by-month breakdown of your account balance, over and above the information contained in your Annual Statement.
Approximate cost: £15 - £30

Interim/copy statement
Usually charged when you request a copy of an annual statement previously issued or when you request a statement outside of the normal annual statement period.
Approximate cost: £10 - £20

Further advance application received
You can often have the facility to borrow further funds once you have been paying your mortgage for a set period of time. This fee covers the cost of assessing the merits of your application.
Approximate cost: £50 - £100

Further advance legal cost
Also charged when you apply for a further advance, this covers the necessary administration to ensure that the lender's legal charge over the property is maintained when further money is lent.
Approximate cost: £20 - £50

Scheme switching fee
This can be charged when you request to transfer your debt from one mortgage product to another. It is usually charged on completion of the switch. An increasing number of lenders now allow you to switch freely between schemes, though usually only once the introductory offer period is over.
Approximate cost: £0 - £150

Arrears fee
This is charged on a monthly basis to cover additional administrative costs where your mortgage account is one or more monthly payments in arrears.
Approximate cost: £15 - £40

Arrears breakdown
You may have to pay if you request a month-by-month breakdown of any arrear balance and charges. The fee is usually added to your account once you have been sent the breakdown.
Approximate cost: £10 - £30

Solicitors letter
This is charged when your account falls in arrear and the lenders instruct solicitors to act on their behalf.
Approximate cost: £20 - £30

Unpaid ground rent/service charge
If you are a leaseholder, and the freeholder notifies the lender that you have not paid your ground rent or service charge, the lender may penalise you.
Approximate cost: £30 - £50

Unpaid own buildings insurance
You may also be penalised if it is your buildings insurer notifies the lender that you have not paid your premium.
Approximate cost: £20 - £40

Cheque unpaid
If you have a flexible facility that allows you a chequebook, you will be charged if a cheque you write bounces.
Approximate cost: £15 - £30

Mortgage reference
If you apply for a remortgage or a new mortgage, the new lender will want a mortgage reference from your existing lender. You will probably have to pay for this.
Approximate cost: £20 - £50

Deeds release fee
When you are selling the house, your solicitor will need to inspect the deeds.
Approximate cost: £25 - £40

Part sale of land
This is charged when a request is made to sell part of the security. The fee is usually paid when the part sale of land is completed.
Approximate cost: Approx. £50

Redemption fee - new mortgage arranged
Even when you redeem a mortgage in accordance with the rules, outside the redemption period and switch to a new mortgage with the same provider, you will probably be charged a redemption fee.
Approximate cost: £30 - £40

Redemption fee - no new mortgage arranged
You will be charged more if you are moving to a new provider!
Approximate cost: £60 - £80

Affidavit swear
This is charged when the lender is required to swear an affidavit in connection with mortgage arrears or some other circumstance.
Approximate cost: £30 - £40

County court fee
This is charged when the lender provides information to solicitors relating to county court rules.
Approximate cost: £25 - £30

County court re-issue fee
This fee will apply when county court papers are re-issued within three or six months of the issuing of the original information.
Approximate cost: £15 - £20