Let’s face it, no one likes paying a charge if they don’t have to. And when it comes to mortgages, where the expense can already be onerous, avoiding fees can seem like a good idea. But is it possible to get a mortgage without paying any fees? The answer is – almost certainly not!
Even if you manage to avoid a fee for one part of the mortgage transaction, it is likely that you will be charged one for another part.
There are fees when you are seeking a mortgage: an arrangement fee (or booking fee) is charged by many lenders at the point at which they originally lend you the mortgage amount. At the time of writing (7 August 2007) all of the top 10 three year fixed-rate mortgages for house movers include a start-up fee. These range from £215 to £999 for a £150,000 mortgage. You will also have to obtain a property valuation (or survey) and there will be a fee for this, although it is not strictly part of the mortgage. Even if you get the survey carried out independently of the lender you may still be charged a “valuation administration fee” to cover the lenders’ administration expenses.
If you are borrowing a large amount relative to the value of the property (say over 90%) then you could have to pay a “higher lending charge”.
There will also be legal expenses involved, although in some cases lenders cover this cost for remortgages.
If you decide to change your mortgage before the special deal period is up you may have to pay an early repayment charge.
And even if you manage to avoid all of these you may still have to pay a “deeds release fee” when you transfer your mortgage to another lender!
So the upshot of all of this is that fees are now part of the overall package of costs a lender charges with a mortgage. If you want to be sure that you are getting the best overall deal use a mortgage comparison site that compares the true cost of all mortgages – this includes all the fees that you are likely to be charged.