Upfront Mortgage Costs

As well as budgeting for all the costs involved in buying a property such as search fees and stamp duty, you will also need to make allowance for the fees you may be charged for setting up your mortgage.

These include:

Arrangement Fees

These fees are designed to cover the administration costs of setting up the mortgage; however not all lenders will charge for this. In some cases, the first part of the fee is payable on application and is non-refundable should your mortgage not proceed. You can often pay the remainder of the fee when your mortgage funds are released, or it can be collected as part of the monthly mortgage payment.

Legal Fees

Lenders may charge for the cost of creating a mortgage documents, unless - as is usually the case - this work is undertaken by your lawyer and so already included in the other legal fees.

Looking Fee

This may be payable if you choose a mortgage deal where the rate of interest is fixed or discounted.

Valuation Fee

This is the charge made for a professional mortgage valuation - the figure on which the lender will base the final mortgage offer. You can avoid this fee by choosing one of the special deals where the lender bears the cost of the valuation or refunds the fee if the mortgage goes ahead.

Fees typically vary on the property price - expect to pay around £230 for a standard valuation for a house costing less than £100,000; £500 for a house valued at around £500,000 and over £1,000 for anyone looking to spend a million pounds or more.