The mortgage interest rate gets the most attention, but the fees surrounding your mortgage can add thousands of pounds to the total cost. Understanding every charge — and when you can negotiate or avoid them — ensures you compare deals fairly and do not get caught out.
Arrangement Fee (Product Fee)
This is the main fee charged by the lender for setting up your mortgage deal. It is sometimes split into a booking fee (paid upfront, non-refundable) and a completion fee (paid when the mortgage starts).
| Detail | Typical Range |
|---|---|
| Amount | £0–£2,000 |
| When paid | On application or at completion |
| Refundable | Booking fee: usually not / Completion fee: yes if not proceeding |
| Can be added to mortgage | Usually yes |
Fee vs No-Fee Deals
Lenders often offer the same mortgage at two tiers:
| Deal | Rate | Fee | Monthly Payment (£200k, 25yr) | Total Cost (5yr fix) |
|---|---|---|---|---|
| Low rate + fee | 4.20% | £1,500 | £1,084 | £66,540 |
| Higher rate, no fee | 4.50% | £0 | £1,111 | £66,660 |
In this example, the low-rate deal is slightly cheaper over five years despite the fee. But determine the exact numbers for your loan size and term — on smaller mortgages, fees have a proportionally larger impact and the no-fee deal may win.
Valuation Fee
The lender values the property to confirm it provides adequate security for the loan. This is not a full survey — it is a basic check for the lender’s benefit.
| Detail | Typical Range |
|---|---|
| Amount | £0–£500 |
| Based on | Property value |
| Refundable | Usually not |
| Free valuation | Common on competitive deals |
Many competitive mortgage deals include a free valuation, so factor this into your comparison. Even when free, the valuation only confirms the property is suitable security — you should still commission your own survey to identify defects.
Legal Fees (Conveyancing)
| Situation | Typical Cost | Notes |
|---|---|---|
| Purchase | £1,000–£2,000 + disbursements | You choose and pay your own solicitor |
| Remortgage | Often free | Many lenders offer free legal work |
| Remortgage (own solicitor) | £500–£1,000 | If you prefer your own solicitor |
On remortgages, free legal work is a significant perk that can save you £500+. Always compare the total package, not just the rate.
Broker Fee
If you use a mortgage broker, they may charge a fee:
| Type | Cost |
|---|---|
| No-fee broker | £0 (paid by lender commission) |
| Standard fee | £300–£500 |
| Complex case | £500–£1,000+ |
Many excellent brokers charge no fee. Whether fee-free or fee-charging, a good broker should save you more than they cost through better deal selection and smooth processing.
Higher Lending Charge (HLC)
Some lenders charge an HLC when you borrow at a high loan-to-value ratio (typically above 90%). This covers additional insurance the lender takes out to protect against losses if you default.
| Detail | Typical Range |
|---|---|
| Applies when | LTV above 90% (varies by lender) |
| Amount | 0.5–1.5% of mortgage amount |
| Can be avoided | By increasing your deposit |
HLCs are less common than they used to be, but check with your lender — particularly if you are borrowing at 95% LTV.
Early Repayment Charges (ERCs)
Charged if you repay your mortgage — in full or beyond the annual overpayment allowance — during the deal period.
| Year | Typical ERC (Fixed Rate) |
|---|---|
| Year 1 | 5% |
| Year 2 | 4% |
| Year 3 | 3% |
| Year 4 | 2% |
| Year 5 | 1% |
On a £200,000 mortgage, a 5% ERC is £10,000. Check your deal terms carefully before making large overpayments or remortgaging during a deal period.
Exit Fee (Discharge Fee)
Charged when your mortgage account is closed — at the end of the term, when remortgaging, or when paying off in full.
| Detail | Typical Range |
|---|---|
| Amount | £50–£300 |
| Can be avoided | No (if the lender charges one) |
| When charged | On final repayment |
A small charge, but worth noting when comparing the total cost of deals from different lenders.
Stamp Duty Land Tax
While not a mortgage fee, stamp duty is a major cost when purchasing. First-time buyers pay no stamp duty on properties up to £425,000 (until March 2025 threshold changes). For other buyers, rates start at 0% and rise to 12% on portions above £1.5 million.
Summary of All Mortgage Fees
| Fee | Typical Cost | When Paid | Refundable |
|---|---|---|---|
| Arrangement/product fee | £0–£2,000 | Application or completion | Varies |
| Valuation fee | £0–£500 | Application | Usually no |
| Legal fees (purchase) | £1,000–£2,000 | Completion | No |
| Legal fees (remortgage) | Often £0 | Completion | N/A |
| Broker fee | £0–£1,000 | On advice or completion | Varies |
| Higher lending charge | 0.5–1.5% | Completion | No |
| Early repayment charge | 1–5% | On early repayment | No |
| Exit fee | £50–£300 | On closing account | No |
How to Minimise Mortgage Costs
- Compare total cost, not just rate — a low rate with a high fee may cost more than a slightly higher rate with no fee
- Negotiate — broker fees and some lender fees may be negotiable
- Maximise your deposit — higher equity means lower rates and no HLC
- Time your remortgage — avoid ERCs by switching at the end of your deal period
- Use free perks — choose deals with free valuation and free legal work where possible
- Pay fees upfront — avoid adding them to your mortgage and paying decades of interest on them