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Capital Ideas is a trading style of Financial Horizons Ltd which is authorised and regulated by the

Financial Conduct Authority, FCA reference No 587075.  Registered in England, company No 07714109.  Registered office 77 Woodcrest  Road Darlington DL3 8EE

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Lenders Costs and Hidden Pitfalls

Mortgage booking fee.  This is a fee charged by the lender, on the face of it to reserve the mortgage funds for you.  Put more clearly, it is a fee that the lender charges in order to increase its profit.  These fees can be substantial.

Mortgage arrangement fee.  This is a fee for the lender’s administration in considering your mortgage application.  The amounts involved can be substantial.

Valuation or survey fee.  A lender will usually instruct a qualified surveyor to check whether it can safely lend money on the property that you want to buy.  The valuation or survey fee is the charge for the service, although lenders will often include an additional administration fee within this.  Different levels of survey are available, so costs vary.

Reinspection fee.  If work has to be carried out as a condition of the mortgage, the lender may ask the surveyor to reinspect the property before funds are released.  This is the charge for such an inspection.

Costs and hidden charges

Higher lending charge.  Lenders often take insurance cover in case they have to repossess your property and sell it at a loss.  Although this cover benefits only the lender, you will often have to pay the cost.  Many lenders are moving away from charging this type of fee.

Insurance fee.  Although you must insure your property as a condition of the mortgage, you are not normally obliged to insure it through the lender.  If you arrange independent insurance, the lender will usually charge a fee to check that your own insurance meets their minimum requirements.

Telegraphic transfer fee.  Usually a lender will transfer funds to your solicitor electronically when the funds are needed in order to complete your house purchase or remortgage.  This cuts down on the normal bank clearance time.  The fee is usually fairly modest.

Redemption penalty (early repayment charge).  This is a penalty that is paid on certain mortgage deals, for paying your mortgage off earlier than expected.

Redemption administration charge.  This is a charge, on the face of it, for the administration involved in closing your mortgage account and dealing with the legal administration of discharging the mortgage deed.  Very often, however, the charges are excessive compared to the work involved.

Beware if you are asked to add costs onto your mortgage if you don’t need to.  Although this may reduce the initial pain, remember that you will be paying for these fees (and paying interest on them) for the whole of your mortgage term.

The mortgage market is competitive, and the level of these fees varies considerably.  All of these fees need taking into account before you choose which mortgage deal to go ahead with.

To get on with finding the best mortgage deals for you, just contact us to discuss your needs.

Your home may be repossessed if you do not keep up repayments on your mortgage

Our typical mortgage advice fee is 0.5% of the amount borrowed.  This depends on individual circumstances