Mortgage Fees Explained: The Complete Breakdown

Mortgage fees can add thousands to your borrowing costs. Understanding each fee helps you compare products accurately and budget effectively. This guide breaks down every fee you might encounter.

Overview of Mortgage Fees

Here's a quick reference for typical mortgage fees:

Fee Type	Typical Range	When Paid
Arrangement fee	£0-£2,000	Completion or added to loan
Booking fee	£0-£250	Application
Valuation fee	£0-£500+	Application
Legal fees	£500-£1,500	Completion
Broker fee	£0-£500+	Completion
Transfer fee	£25-£50	Completion
Exit fee	£50-£300	When leaving lender

Arrangement Fee (Product Fee)

The arrangement fee—sometimes called a product fee or completion fee—is charged by the lender for setting up your mortgage.

How It Works

• Typically £500-£2,000, occasionally higher
• Can be paid upfront or added to loan
• Adding to loan means paying interest on the fee
• Usually non-refundable if you proceed then withdraw

Should You Add It to the Loan?

Example: £1,500 arrangement fee on a 5-year fix at 4.5%

Option	Upfront Cost	Interest on Fee	Total
Pay upfront	£1,500	£0	£1,500
Add to loan	£0	~£350	£1,850

Adding the fee to your loan costs more in the long run but preserves cash for other costs.

Booking Fee (Application Fee)

Some lenders charge a non-refundable fee when you apply.

What to Know

• Typically £0-£250
• Paid at application, before you're accepted
• Usually non-refundable even if declined
• Less common now than arrangement fees

Many competitive products don't have booking fees, so factor this into comparisons.

Valuation Fee

The lender needs to value the property to ensure it's adequate security for the loan.

Types of Valuation

Type	Purpose	Cost
Mortgage valuation	For lender only	Often free, or £150-£300
Homebuyer report	For you + lender	£300-£600
Full survey	Comprehensive assessment	£500-£1,500+

Free Valuations

Many lenders offer free standard valuations as an incentive. This is increasingly common on competitive products.

Legal Fees (Conveyancing)

Solicitors or licensed conveyancers handle the legal work of transferring property ownership.

Purchase Legal Fees

• Typically £1,000-£2,000
• Includes searches, Land Registry, and administration
• Disbursements (search fees, etc.) often charged separately
• Compare quotes—significant variation exists

Remortgage Legal Fees

• Often free (lender pays)
• "Free legals" is a common remortgage incentive
• If not free, typically £300-£500
• Usually simpler than purchase conveyancing

What's Included

Legal fees typically cover:

• Contract review and exchange
• Local authority searches
• Land Registry registration
• Bank transfer handling
• Liaison with all parties

Broker Fees

Mortgage brokers can charge for their advice, though many are paid by lender commission only.

Fee Structures

Type	How It Works
Fee-free	Broker paid by lender commission
Fixed fee	Set amount (e.g., £500)
Percentage	Percentage of loan (e.g., 0.3%)
Combination	Reduced fee + commission

When Paying a Fee Makes Sense

• Complex cases requiring significant work
• Access to exclusive rates
• Higher service level
• Some high-street lenders don't pay commission

Telegraph Transfer Fee

Also called a CHAPS fee—covers the electronic transfer of funds.

• Typically £25-£50
• Charged by your solicitor or lender
• Covers the secure same-day transfer system
• Usually unavoidable

Exit Fee (Discharge Fee)

Charged by your old lender when you pay off or transfer your mortgage.

What to Expect

• Typically £50-£300
• Called "mortgage exit fee" or "discharge fee"
• Covers administrative costs of closing the account
• Charged regardless of reason for leaving

Some older mortgages have no exit fees; check your paperwork.

Early Repayment Charges (ERC)

Different from exit fees—ERCs are penalties for paying off your mortgage early during a fixed or special rate period.

Typical ERC Structure

Year of Deal	Typical ERC
Year 1	5%
Year 2	4%
Year 3	3%
Year 4	2%
Year 5	1%

See our lender limits guide for more on overpayment allowances and ERCs.

Higher Lending Charge

Historically charged on high-LTV mortgages, this is now rare. Most lenders have eliminated it or built it into rates.

Comparing True Costs

To compare mortgages accurately, calculate the total cost over the deal period.

Example Comparison

Scenario: £200,000 mortgage, 5-year fix

Product	Rate	Fee	Monthly	5-Year Total
Product A	4.3%	£1,500	£1,087	£66,720
Product B	4.5%	£0	£1,111	£66,660

Despite the higher rate, Product B costs slightly less overall due to no fee.

Formula

Total cost = (Monthly payment × number of months) + all fees

Fees by Scenario

First-Time Buyer Purchase

Fee	Typical Cost
Arrangement fee	£0-£1,500
Valuation	Often free
Legal fees	£1,000-£1,500
Survey	£300-£600
Broker	Often free
Total	£1,300-£3,600+

Plus stamp duty—see our stamp duty guide.

Remortgage

Fee	Typical Cost
Arrangement fee	£0-£1,500
Valuation	Often free
Legal fees	Often free
Exit fee (old lender)	£50-£300
Total	£50-£1,800+

Product Transfer

Fee	Typical Cost
Product fee	£0-£1,000
Total	£0-£1,000

Product transfers avoid most fees, making them attractive for straightforward cases.

Reducing Your Fees

Negotiate

• Ask your broker about fee-free alternatives
• Some lenders match competitor fees
• Solicitors' fees are often negotiable

Bundle Services

• Some lenders offer free legals + free valuation packages
• Combined broker + legal services can reduce costs

Choose Wisely

• Fee-free products often make sense for smaller loans or shorter fixes
• Higher fees may be worthwhile for large loans over long fixes

Summary

Mortgage fees can add £1,000-£5,000+ to your borrowing costs. Always calculate the total cost over your deal period, including all fees, rather than comparing headline rates alone. For purchases, budget for legal, survey, and arrangement fees on top of your deposit and stamp duty. For remortgages, free legal and valuation deals can significantly reduce costs.

Understanding these fees helps you compare products accurately and avoid surprises at completion.