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Mortgage Advisor & Director
What is a Mortgage Arrangement Fee?
A Mortgage Arrangement Fee is a one-off fee charged by some mortgage lenders when you agree to take out a mortgage with them. The fee covers the costs of setting up your mortgage and can range from a few hundred pounds to a couple of thousand pounds.
When shopping around for a mortgage deal, it's important to compare not only the interest rates but also the arrangement fees and other mortgage fees. A higher interest rate with a lower arrangement fee could work out cheaper than a lower interest rate with a higher fee.
Depending on your mortgage lender, you may be able to add the arrangement fee to your mortgage loan, which means you won't have to pay it upfront. However, this will increase the amount of interest you pay over the term of your mortgage.
Some lenders may offer a 'no-fee' mortgage deal, but this could mean that the interest rate is higher. It's important to do your sums and work out which option is best for you.
If you're working with an experienced mortgage broker, they should be able to help you compare different mortgage deals and find the one that's right for you. At Teito, we compare the best deals from across the entire mortgage market, so you don't have to. Our expert mortgage advisors can save you time and money, so why not get in touch today?
Understanding Mortgage Fees
Mortgage fees can be paid upfront or added to your mortgage loan, although if you add the fee to your loan you will end up paying more interest on it over the term of the mortgage.
There are a few different mortgage fees and costs that you might need to pay when taking out a mortgage:
- Mortgage Booking fee: This is charged by some lenders when you first apply for a mortgage. A mortgage booking fee covers the cost of processing your application and will not be refunded even if your mortgage does not go through. Cost estimate: £100 - £250.
- Mortgage valuation fee: This is a fee charged by the lender to cover the cost of having your property valued. Cost estimate: £250-£1,500
- Mortgage account fee: This is an annual fee that you may be charged to cover the cost of maintaining your mortgage account. Cost estimate: £100-£300
- Arrangement fee: As we've already mentioned, this is a one-off fee charged by some lenders when you agree to take out a mortgage with them. Cost estimate: £0 to £2,000
- Higher lending charge: This is a fee that some lenders charge if they are lending you a high percentage of the property value (usually 90% or more). If applicable, this is typically around 1.5% of the mortgage value.
You should also be aware of other costs that are not directly related to the mortgage itself, such as:
- Stamp duty: This is a tax that you have to pay on properties worth more than £125,000.
- Legal fees: You will need to instruct a solicitor or conveyancer to carry out the legal work involved in buying a property.
- Survey fee: It is strongly recommended that you have a survey carried out on the property before you buy it, in order to check for any structural defects. The cost of the survey will depend on the size and type of property.
- Mortgage broker fee: (Free with Teito!) If you use a mortgage broker to help you find a mortgage, they may charge you a fee for their services.
- CHAPS payment fee: This is a fee charged by your bank when you instruct them to make a large payment, such as when you're buying a property.
All of these fees you need to pay can add up, so it's important to factor them into your budget when you're trying to figure out how much you can afford to spend on a property.
If you're not sure what all of these fees are, or how much they might cost, your mortgage advisor should be able to give you more information.
Should I Pay Mortgage Arrangement Fees?
Whether or not you should pay an arrangement fee depends on a number of factors. Firstly, you need to consider how much the fee is and whether you can afford it. Remember that the aim is to get the most affordable mortgage possible, so if paying the fee means that you have to pay a higher interest rate then it might not be worth it.
It's also important to think about how long you're planning on staying in the property. If you're only planning on living there for a few years, then it might not be worth paying the fee as you won't benefit from the lower interest rate for very long. However, if you're planning on staying in the property for the long term, then it could be worth paying the fee in order to get a lower interest rate.
Your mortgage advisor should be able to help you compare different deals and work out whether or not it's worth paying an arrangement fee. They will also be able to tell you if there are any deals available that don't have an arrangement fee, which could save you money in the long run.
At Teito, we can help you compare mortgage deals from across the entire market, so you can find the one that's right for you. We offer free mortgage advice with no obligation, so why not get in touch today?
Are Mortgage Fees Refundable?
Mortgage fees are not always refundable, so it's important to check with your lender before you agree to anything. Some fees, such as the valuation fee and the mortgage broker fee, are usually only payable if your mortgage goes through. However, other fees, such as the arrangement fee or booking fee, are often non-refundable even if your mortgage doesn't go ahead.
This is because the arrangement fee is paid to the lender to cover the cost of setting up your mortgage. Even if your mortgage doesn't go through for some reason, the lender will still have incurred these costs.
If you're not sure whether or not a fee is refundable, your best bet is to ask your lender before you agree to anything. That way, you'll know exactly what you're liable for and won't be caught out if your mortgage doesn't go ahead.
Will I Need to Pay an Early Repayment Charge?
If you want to repay your mortgage early, you may have to pay an early repayment charge (ERC). This is a fee charged by some lenders if you repay your mortgage before the end of the agreed term. The amount of the fee will depend on how much you borrowed and how long you've been paying off the mortgage.
If you're thinking about selling your property or moving to a new one, it's important to check whether or not you'll need to pay an Early Repayment Charge. If you do have to pay one, it could add a significant amount of money to the cost of selling your home, so it's important to factor this into your plans.
Your mortgage advisor should be able to tell you if there is an ERC on your mortgage and how much it would cost to pay it off early. They can also help you compare different deals to find one that doesn't have an ERC, which could save you money in the long run.
At Teito, we help you to find the right mortgage deal for your needs. We offer free mortgage advice with no obligation, and getting started is easy!
Is It Normal For Mortgage Brokers To Charge A Fee?
Some mortgage brokers will charge a fee for their services, while others will not. It's important to check with your broker before you agree to anything, as some fees can be quite expensive. Teito offers mortgage advice with no obligation.
Can I Get A Mortgage Without Paying Any Fees?
It is possible to get a mortgage without paying any fees, but it's important to compare deals carefully before you commit to anything. Some mortgage deals will have high-interest rates even if you don't pay any fees, so it's important to make sure that you're getting the best deal possible.
Your mortgage advisor should be able to help you compare deals and find one that doesn't have any fees. They can also give you advice on how to get the most affordable mortgage possible, so it's always worth asking for their help.
At Teito, we offer mortgage advice with no obligation. We can help you compare deals from across the market and find one that's right for you. Start comparing deals now and you could get a mortgage in principle in minutes!
Choosing an Adviser
Selecting a qualified and experienced mortgage adviser is of great importance. To choose a suitable adviser, evaluate their qualifications, experience, and reputation, and ensure they are regulated by the Financial Conduct Authority (FCA).
Read reviews from previous clients and make sure they provide a clear explanation of the products and services they offer, as well as the fees and charges associated with them.
