Mortgage fees explained

Two mortgages at the same rate can cost very different amounts. A 4.50% rate with no fee is cheaper than a 4.25% rate with a £1,999 product fee on a small loan; the reverse is true on a large loan. Most buyers look only at the rate and miss the fees, which is how people end up with "save £200 per month" deals that actually cost more in total.

Here's what each fee is, how big it typically is, and which ones you can negotiate away or avoid.

Know what you're being charged

Product (arrangement) fee

The lender's fee for setting up the mortgage. Typically £0-£1,999. Usually the largest fee. Can be paid upfront or added to the loan (you'll pay interest on it for the term but it saves upfront cash). Rate and product fee trade off, lowest rates usually have highest fees. We compare total cost, not headline rate.

Booking fee

Some lenders charge a non-refundable fee (£100-£300) to reserve a specific product. Not all lenders. Paid upfront and rarely added to loan. Less common than it used to be.

Valuation fee

Paid to the lender for their mortgage valuation. Often free on new mortgages (lender absorbs cost), £100-£400 on some products. Different from your own homebuyer survey, that's separate.

CHAPS / telegraphic transfer fee

Small fee (typically £20-£50) for the lender to send funds to your solicitor on completion. Added to the completion statement, not optional, rarely significant.

Early repayment charge (ERC)

Charged if you repay or remortgage during a fixed/tracker period. Usually 1-5% of loan balance, tapering down through the fix. Can be significant, always check before paying off a mortgage early.

Exit fee / deeds release fee

Sometimes a small fee (£50-£150) when you pay off the mortgage entirely, to cover admin and send you your title deeds. Now rare.

Broker / advice fee

The fee a broker charges you, if any. Major Money Matters charges no broker fee on any case, including complex work such as adverse credit, bridging, specialist buy-to-let and high net worth: the lender pays us a procuration fee on completion. Third-party costs may apply and are always disclosed in writing before you commit. Other brokers charge anywhere from £0 to £2,500+, always ask.

Higher lending charge (HLC)

Historical fee on high-LTV mortgages (90%+ LTV). Now largely gone, very few mainstream lenders still charge this. Check on specialist lenders.

How to compare mortgage total cost

The metric that matters is total cost over the initial period, not headline rate. The formula (simplified):

Worked example. £250,000 mortgage, 5-year fix, repayment over 30 years. Two products to compare:

Product A wins by £281 over 5 years on a £250k loan. On a smaller loan (£150k), the fee matters more proportionally and Product B would likely win. The comparison depends on your exact loan size. We run this calculation for every client, it takes 5 minutes and is worth doing properly.