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What are Mortgage Fees?
Whatever mortgage you are offered these days usually encompasses some sort of fee that you have to pay. Be it a fee for taking out the mortgage OR a fee you have to pay for leaving the mortgage deal early (Early Repayment Charge - ERC).
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During the past few years, the amount of fees being charged for mortgages by lenders throughout the UK has increased tremendously. As competition online has risen of late, the mortgage lenders have had to claw back money in areas such as fees as the low interest rates they are giving customers has significantly reduced their profit margins.
A few years back the mortgage lenders would charge a fee for a mortgage which would acually cover the administration charge of setting everything up. As the previous paragraph explains, now these increasing fees are simply a different way of increasing revenues for the lender.
Product or Arrangement Fees
These type of fees are associated with taking out a mortgage. Some companies can charge up to £2000 to setup a mortgage but the average seems to be around £500. Be aware that some mortgage lenders can keep this arrangement fee if your mortgage application is declined so it is wise to have this fee included in the mortgage loan amount.
Valuation Fees
Your mortgage lender needs an accurate valuation on he property you are purchasing so will employ a surveyor in order to carry out the valuation process. The valuation fee is usually relative to the actual value of the property being surveyed. Be aware that these fees can vary greatly from lender to lender and making a good comparison before you choose a mortgage lender is recommended in order to save you money.
Higher Lending Charges
Some mortgage lenders levy a higher lending charge to buyers/borrowers should the wish to borrow in excess of 75% of the value of the property. The majority of these mortgage lenders will only apply the charge to mortgages with a 91% loan to value ratio. Put simply, so long as you can muster a 10% you should be able to dodge this fee.
The HLC (Higher Lending Charge) can also relate to the amount required by the borrower. An example of this is a customer looking to borrow £100,000 who has a 5% deposit; an average fee would be £1,500. However should the property looking to be mortgaged be worth double (i.e. £200,000), then the charge would be more like £3,000.
Early Repayment Charges or ERC's
An Early Repayment Charge or ERC is usually associated with discounted variable rate and fixed mortgage agreements. They are usually calculated as a set amount (usually a percentage) of the mortgage loan that outstands. The ERC usually only applies to a borrower within the set timeframe of the discounted period should they wish to remortgage.
Make yourself aware of how long the ERC is in effect for as some discounted mortgage deals can last years and should interest rates take a nosedive during this period it will be very tempting to remortgage. Some ERC's diminish the further into the discounted period you encounter making the amount you pay to get out of the contract gets smaller and smaller as tinme goes on giving you a little more flexibility.
Legal Fees for your Mortgage
The legalities of a mortgage are always dealt with by a solicitor. The average cost for a solicitor to arrange a mortgage is around £200 and the lender will be expected to pay this cost which is then usually passed on to the borrower unless the lender is running some promotion.
In the case of you moving house the mortgage lender will usually employ the solicitor you are already dealing with so no unexpected fees from 3rd party solicitors should be invoked.
Visit www.aph.org.uk and let us find you the right mortgage for you with low fees. | 
